
CopyrigMN?. 



COPYRIGHT DEPOSnV 



THE CREATION OF 
WEALTH 

Modem Efficiency Methods Analyzed 
and Applied 

BY 

J. H. LOCKWOOD 



CINCINNATI 

The Standard Publishing Company 



Copyrighted. 1915, 
by J. H. LOCKWOO'D 



V 



'A 



V 



FEB I 1915 

© CI, A o 9 3 4 8 3 



CONTENTS 

PAGE 

Foreword 5 

Introduction 11 

I. 

Wealth IS 

II. 

Capital 25 

III. 

Divisions of Wealth 29 

IV. 

ExpiiEssioN 38 

V. 

Who and Hov/ ? 51 

VI. 

Inventions and Discoveries 11 

VII. 

The Entrepreneur 100 

VIII. 

Winsome Wealth 151 

IX. 

Distribution or Opportunity ? 167 

X. 

Trusts and Special Privileges 179 

XL 

Physical Valuation and Watered Stock 188 

XII. 

Socialism 194 

XIII. 

Single Tax 206 

XIV. 

Conservation 211 

XV. 

The Industrial Magna Charta 218 

XVI. 
Conclusion 220 

3 



FOREWORD 

If the reader, in taking up this book, should 
become alarmed at the term "economics," which it 
professes to touch upon, he should not unceremo- 
niously cast it aside, for it may not be so danger- 
ously economic after all. In this reflection the 
economists will no doubt heartily concur. This 
treatise does not deal with the ordinary subject- 
matter to be found in the current works on eco- 
nomics, but begins where they leave off and 
attempts to build a super-science, so to speak, upon 
the old one. 

There has been a tendency in recent literature 
treating of industrial life to emphasize a mysterious 
element ulterior to the recognized factors of pro- 
duction — land, labor and capital. The subject has 
been approached from the practical side by Har- 
rington Emerson in his treatises on "Efficiency" ; 
by Frederick W. Taylor, in his "Scientific Manage- 
ment," and others. Hugo Munsterberg and other 
psychologists have discoursed upon it from their 
point of view, and W. H. Mallock and various 
social writers have dealt with it from a humani- 
tarian angle — and even the poetically inclined have 
not altogether ignored it, for Gerald Stanley Lee, 
in "Inspired Millionaires" and "Crowds," gets a 
glimpse of a great truth from Mt. (Parnassus) 
Tom. 

5 



6 THE CREATION OF WEALTH 

While by inference the mysterious element is 
brains — or brain products — (ideas), yet, as far as 
the author has noted, no attempt has been made to 
analyze the economic functions of the mind or to 
determine just in what manner it "creates" wealth. 
Munsterberg, in his recent work on "Psychology 
and Industrial Efficiency," says that a new science 
is developing "intermediate between the modern 
laboratory psychology and the problems of eco- 
nomics," This may be true, but it would appear 
that the object of all methods of producing greater 
efficiency is to increase economic production, and 
that this function of industrial workers naturally 
falls under the head of Political Economy. 

It does not concern the author, however, whether 
the economists, of which there is a great variety, 
recognize his efforts as an addition to the science, 
or as one of the new sciences which Professor 
Munsterberg refers to, being content if he has 
proven the productivity of the factor of mind. 
The author endeavors to delineate the creativeness 
of man in its widest aspect, and, if in so doing the 
conclusions sometimes reached are somewhat start- 
ling, they are honest ones, and he will be the first 
to acknowledge his error if it can be shown. 

Is it not suggestive that economics should be 
the last of the sciences to recognize impalpable 
forces in the consideration of material and indus- 
trial phenomena? Even physics, which is supposed 
to deal with matter solely, has advanced to a point 
where the greater part of the treatises on the sub- 
ject is devoted to the discussion of "energy." 
As far back as 1892 George F. Barker, in his text- 



FOREWORD 7 

book on "Physics," said in the preface to the work : 
"Within the past decade the progress which has 
been made in the physical science has completely 
changed its aspect. The most striking feature of 
this advance, unquestionably, is the much greater 
importance which the phenomena of energy have 
assumed in all physical discussions as compared 
with the phenomena of matter. The physics of 
to-day is distinctly the science of energy. Hence- 
forth every physical change must be regarded as 
conditioned upon the transference or transformation 
of energy. It is from this point of view, therefore, 
that any text-book of physics must present the 
subject. Hence the classification which has been 
adopted in the present work is based on the most 
recent views of energy, considered as being ulti- 
mately a phenomenon of ether. At present, all 
physical phenomena seem capable of satisfactory 
discussion under the heads of mass-physics, mole- 
cule-physics and ether-physics. And the fact is 
significant that to the last subdivision of the subject 
it has been found necessary to devote more than 
one-half of the entire work." 

Since the statement quoted was written, still 
greater advancement has been made in the science. 
The electron has supplanted the atom in the consid- 
eration of physical units, and upon this theory has 
been founded a new branch of the science. Physics 
has laid bare to the industrial world that marvel of 
all physical or ether wonder-workers, electricity, and 
has tamed and harnessed it for the use of man. 
This is the force that carries our messages over 
land or sea, with or without wires ; it is the force 



8 THE CREATION OF WEALTH 

that bears the human voice across a continent, and 
allows us, as it were, to be in two or more places 
at the same time; it transports us and all the mate- 
rials that go to make up modern life at a mile a 
minute; it lights our cities, turns the wheels of 
industry, and works marvels in a thousand ways in 
the applied arts and sciences. 

In this work it will be shown how the mind of 
man has uncovered all of these wonders — and more 
in other sciences — and how it works hand in hand 
with these energies in the production of wealth. 
Manual labor may be compared with the five 
mechanical powers — the lever, pulley, wheel, inclined 
plane and screw; i. e., it can only remove material 
from place to place, while the mind of man may be 
compared with the impalpable forces, electricity, 
cohesion, adhesion, gravity and chemical reactions. 
These forces not only move material, but substitute 
better material for the old, and, in some instances, 
eliminate matter altogether. 

The author will attempt to show in succeeding 
chapters how all modes of mental expression can be 
classed under fifteen "efficiency methods"^ or "ex- 
pression forms" ; and an attempt will be made to 
analyze the economic functions of the various 
mental workers of the world with reference to 
these methods. 

In these feverish days of social and industrial 
unrest, even though much of it be irresponsible and 
unreasoning, where a host of nondescript malcon- 
tents are endeavoring to pull down on our heads 
the magnificent economic superstructure we have 
reared, it may not be amiss to stop and consider if 



FOREWORD 9 

it is worth the trouble. What with socialism, syndi- 
calism, single taxism, and many other "isms" too 
chameleonic to classify, armed to the teeth, in a 
tremendous fight against the ruling economic order, 
it may be well to try to get down to a working 
theory of Industrialism; to take an inventory of 
what has been done, to try to discover what is 
about to be done and to determine whether "has- 
beens" and "about-to-bes" are in harmony or dis- 
harmony with the "ought-to-bes." 



INTRODUCTION 

In the evolution of the various sciences and arts, 
none, perhaps, has had a harder struggle than that 
of Political Economy. The old Mercantilists, mis- 
taking the shadow for the substance, held wealth 
and money identical. The Physiocrats added raw 
materials to metals, or money, in their consideration 
of productive wealth. Adam Smith and John Stu- 
art Mill went a step further and recognized all 
products of land, labor and capital as constituting 
wealth, while modern economists have gone still 
further and recognize mental labor, in a limited 
sense, as a source of wealth; namely, in the sense 
of direction or management. The idea of creative 
v/ealth and the stupendous part it plays in the pro- 
duction of wealth does not appear to have been 
thought of, or, if so, entirely ignored. 

In his economic treatise on "Enterprise and 
Productive Processes," F. B. Hawley says: "When 
Adam Smith revolutionized the science of Eco- 
nomics he halted in his analysis at two very impor- 
tant points, which, as every specialist will admit, his 
successors have not succeeded fully in resolving. 
These two dubious matters are the precise function 
of the entrepreneur and the exact scope of the 
science itself." And further on he says: 

"It v/ill be difficult to find an economist who 

would claim that he possesses a standard, con- 

11 



12 THE CREATION OF WEALTH 

formity to which can be demanded in economic 
conditions and in the use of economic terms ; or 
that the function of the entrepreneur or the nature 
of profit are thoroughly understood; or that he is 
fully aware of a satisfactory definition of the 
science itself." He adds : "Suffice it to say that 
economists, generally, in the words of one of them, 
accept co-ordination (of land, labor and capital) as 
a 'singularly felicitous phrase,' to express the 
economic function of the entrepreneur." 

The author quoted says that economists are not 
agreed upon the exact scope of the science. This is 
not to be marveled at when their inadequate defini- 
tion of wealth is considered. To paraphrase the 
dictum of Terence, "I am a man and nothing that 
pertains to man is alien from me," Political Econ- 
omy is the science of wealth and nothing that per- 
tains to wealth is foreign to it. It will be shown in 
this treatise that many things which are not now 
considered by economists as factors of wealth must 
be so considered. The economists have erred in 
their consideration of v/ealth in two important 
points. First, in its limitation to material objects 
which can be transferred or appropriated; and, 
second, in their failure to recognize that a thing 
may be of value at one time or place and not at 
another time or place; i. e., they fail to distinguish 
between direct and indirect wealth. 

Economic life is in a state of flux, and wealth 
and non-wealth are perpetually playing hide-and- 
seek. Even the value of material objects fluctuates 
with changing conditions, and such a substantial 
thing as a house or any other kind of a building 



INTRODUCTION 13 

may represent a liability rather than an asset if the 
rentals therefrom do not exceed the cost of main- 
tenance, interest, taxes, etc. 

The inadequate scope of economy, as taught, is 
nowhere better illustrated than in the treatment of 
inventions. In most of the text-books on Political 
Economy, this great economic factor, if treated at 
all, is glossed over with a few lines or a paragraph, 
and is casually mentioned under the head of 
"Profits" or some equally absurd division of the 
science. It is a remarkable fact that the economists 
should have overlooked this prodigious source of 
wealth. An inventor, scientist, playwright, or the 
like, will produce something for which he is paid 
outright thousands of dollars, yet this form of 
creative or "idea-wealth" is practically ignored. It 
can be explained only on the theory of the innate 
conservatism of man — his habit of following cus- 
toms and respecting time-honored authorities. Adam 
Smith and John Stuart Mill blazed the way for the 
mechanical theory of wealth which has held sway 
for so long a time. 

It shall be conclusively proven that man is 
wealth per se, and, furthermore, that he creates 
wealth. The word "create" is used in its literal 
sense — the making of something out of nothing, if 
we consider that ideas and other impalpable forces 
are such. 

Economics, as treated by its orthodox exponents, 
might be called the science of transferable mate- 
rial objects, with a total disregard for any of their 
properties excepting those representing utility. This 
faulty concept is the basis of an endless variety of 



14 THE CREATION OF WEALTH 

errors arising in the discussion of the science, which 
SeHgman, Hawley and other economists admit is in 
it& infancy. 

In his text-book on "Principles of Economics," 
Seligman says : "As the science itself becomes more 
and more complete, it will be in a better position to 
apprehend and explain the real content of existing 
conditions and the true method of making the actual 
conform to the ideal. Economics, which is to-day 
only in its infancy, and which of all disciplines is per- 
haps the most difficult and the most complicated, is 
indeed interlaced with and founded upon the actual 
condition of the time ; but, like natural science, the 
economics of the future will enable us to compre- 
hend the living forces at work, and by so doing will 
put us in a position to control them and to mould 
them to even higher uses. Economics is, therefore, 
both the creature and the creator. It is the creature 
of the past; it is the creator of the future. Cor- 
rectly conceived, adequately outlined, fearlessly 
developed, it is the prop of ethical upbuilding; it is 
the basis of social progress." 

A better statement of the case could not well be 
made, and if this Vv^riter can assist even in a small 
measure in assisting in the solution of the social 
and economic problems which to-day agitate the 
country and the world, his labors will have been 
well repaid. 



Wealth. 

What is wealth? We have seen that the Mer- 
cantiHsts held money to be the only wealth, that the 
Physiocrats added raw materials and that Adam 
Smith and his followers enlarged the definition to 
mean any material utility which requires labor for 
its production and which can be appropriated or 
exchanged. We will endeavor to show that all of 
these definitions are defective, but that each suc- 
ceeding group came a little nearer to the truth. 

Wealth has a subjective and an objective aspect. 
Subjectively, it is the realization of one's desires or 
needs. Objectively, it is the product of two factors 
— opportunity and labor, or its antithesis, play. 
Work and play should be interchangeable terms in 
a perfect state of economic development. The term 
labor includes mental as well as manual labor. Of 
course the desires and needs represented in sub- 
jective wealth are properly confined to those things 
which have a money value. Subjectively, the value 
of a thing does not depend upon a money equiv- 
alent. 

The value of things varies with locaHties and 
seasons. For example, an apple may be of no par- 
ticular value in the country in a prolific year, 
whereas in the city something can always be real- 
ized from its sale. A little thought will enable one 

2 15 



16 THE CREATION OF WEALTH 

to perceive that there is no hard-and-fast line 
running between indirect or potential wealth and 
what has been designated as economic wealth. To 
illustrate: The apple, which has been called the 
"Fruit of the Gods," in lean years, or when there 
is only an average crop, may be designated as 
economic wealth. A market can readily be found 
for the entire crop. But in years of abundance 
many apples are allowed to go to waste in the 
orchard. The fruit that is permitted to rot is 
plainly of no economic value as such. It may 
enrich the ground to a certain extent and render an 
economic service in that way, but this is only an 
incidental service. Suppose that, instead of per- 
mitting the fruit to decay, it is given to the needy, 
does it then become economic wealth? If you 
answer no, as it has no exchange value, we will put 
the question in a different way: Suppose the fruit 
is given only to those who will come after it — do 
not the time and labor devoted to its procurance, on 
one hand, and the element of land in its production, 
on the other hand, constitute the productive factors 
of economic wealth? This question can only be 
answered in the affirmative. 

The apple thus becomes wealth to the recipient. 
It will be shown how it could be made productive 
to the original owner by the application of the brain 
and muscle forms of labor. There are several ways 
in which this could be done; namely, in drying or 
canning, by feeding to live stock, by converting into 
cider, or by placing them in storage. They could 
be kept in one or more of these ways until a 
demand is either created in foreign countries or 



WEALTH 17 

until a short crop renders them of economic value. 
Rapid transportation and refrigeration have made 
available other methods of utilizing perishable goods. 

In the same manner an idea or a thought may 
be of value or otherwise. The law of supply and 
demand governs alike the material and immaterial 
world. If the idea is a rare one, and one that 
appeals to the popular mind, it can be marketed as 
wealth. 

Applying this principle to natural objects, it will 
be seen that great scenic or climatic attractions may, 
or may not, have an economic value. If the natural 
scenery of a section of a country has such distin- 
guishing characteristics as to attract travelers and 
sight-seers, it must be classed as wealth. If the 
climatic conditions are such as to attract health and 
home seekers, the same classification obtains. 

The United States has a great number of inter- 
national playgrounds, including the Yellowstone 
National Park, the Yosemite Valley, Niagara Falls 
and other scenic wonders. People are willing to 
expend both time and money to see these great 
cosmic creations. In other words, these attractions 
afford an opportunity to play, and this opportunity 
attracts untold wealth, not only from other sections 
of the country, but from all parts of the world. 

But the orthodox economists will contend that 
this is not productive wealth. The answer is that 
money is the measure of wealth and that it can be 
exchanged for anything of value representing man's 
needs. Further along it will be shown how this 
kind of wealth can be, and is, capitalized. Surely, 
the international playgrounds must be classed with 



18 THE CREATION OF WEALTH 

other things possessing beauty or other qualities 
which please the senses. A girl purchases a hat — 
is it principally for useful or ornamental purposes? 
What about jewelry, fine clothes, beautiful houses 
and all things of a decorative nature? When 
James J. Hill, David H. Moffatt, C. P. Huntington 
and other master railroad builders conceived the 
idea of opening up the great scenic West to the 
world, they evidently overlooked the economic doc- 
trine that there can be no value except in things of 
a productive nature. Perhaps they were ignorant 
of the teachings of Political Economy and foolishly 
built their roads v/hile laboring under the economic 
delusion of a value in things which appeal to one's 
sense of grandeur or beauty. If such be the case, 
it is very fortunate for the country. 

Wealth, then, in view of the above considera- 
tions, is anything which can be appropriated or 
exchanged, or which the qualities thereof may be 
appropriated, admired or enjoyed. The drawing of 
a line between the useful and the ornamental, 
between the material and the immaterial, by the 
economists has prevented them from grasping the 
great central truth of creative wealth as applied to 
industrial conditions to-day. 

An individual pays admission into a theater to 
witness a play. He does not buy or appropriate 
the house nor the players, but merely appropriates 
or admires the immaterial enjoyments they offer. 
He goes to hear a band or an orchestra. He does 
not purchase the band, nor even the director, tie 
purchase a ticket for a menagerie. Does he carry 
away any lions or monkeys? 



WEALTH 19 

A man purchases a house. This is a transfer 
of material things. He leases the building for one 
or a hundred years. This is a transfer of the qual- 
ities of the building. In either case, the original 
owner derives a benefit in the shape of money or 
its equivalent, while the occupant secures shelter 
and a home, the purpose for which the house was 
built. 

Let us apply the same reasoning to labor. 
Before the war, slaves were considered property, 
because there was a transfer by purchase from one 
plantation-owner to another. Now they are em- 
ployed by the day, month or year. This may be 
compared to the leasing of the building. Is there 
any valid reason why the building should be classed 
as wealth and the laborer not so classed? In either 
event all that the lessee or employer secures are the 
qualities or attributes of the building or person. 

Stating it as concisely as possible, wealth may 
be defined as anything which satisfies the needs, 
desires or aspirations of man, and it may be either 
material or immaterial. As an illustration, a lover 
of art purchases a painting depicting some sublime 
or spiritual truth. What gives the work of art its 
value — the arrangement of the colors, lights and 
shadows, or the great aesthetic or moral idea which 
the colorings convey? Does the painting have a 
mere physical value expressed in a combination of 
colors pleasing to the eye, or does its worth lie in 
the psychical portraiture of a moral verity? There 
can be but one answer to the question — ^the value 
of the painting is principally of a psychical nature. 

The economists can not ignore this phase of 



20 THE CREATION OF WEALTH 

wealth, for the physical and the psychical are insep^ 
arable and hppelessly intermingled. It can not be 
said that so much of the picture as is material is 
wealth, and all else is of no value. It follows that 
innumerable immaterial properties or qualities which 
have heretofore been left out in the consideration 
of economic matters must now be given recognition. 

The wealth of an apple consists mainly in its 
ability to satisfy the sense of taste; the wealth of 
a flower is in its power to please the senses of sight 
and smell; the wealth of the violin lies in its power 
to excite the sense of hearing. Formerly clothing 
was made or purchased principally to satisfy the 
sense of feeling — that is, to protect the body from 
the elements — but now it may be said that the 
aesthetic sense must be satisfied primarily, the sense 
of feeling having been relegated. In like manner, 
a residence which was formerly built to provide 
shelter and protection must now have ornamental 
additions and surroundings. For instance, the judi- 
cious planting of trees, shrubbery and flowers lends 
the property a value out of all proportion to the 
amount expended. 

In mathematics and kindred subjects there is an 
axiom which proclaims that things which are equal 
to the same thing are equal to each other. There- 
fore, if immaterial as well as material things have a 
money value, then they must be classed as wealth. 
But it may be objected that the , attributes of man 
must be classed as personal, rather than economic, 
wealth. In answer to this, it may be said that there 
is no such thing as personal or individualistic wealth 
pure and simple; i. e., where there is a money con- 



WEALTH 21 

sideration. The law that no man can live unto 
himself applies equally to the economic and social 
worlds. First, speaking generally, every one has a 
family or relatives dependent upon him, or at least 
a servant, and whatever benefits he may derive from 
his personal exertions are shared by members of his 
household. Second, the more people there are in 
the world, the greater the opportunity for the 
acquisition of wealth by any one individual. For 
example, if there were only two people in the world, 
they would have a hard time getting rich by trading 
with each other. It is axiomatic that the more 
people one has to sell to or trade with the more 
wealth he can accumulate. Therefore, as any indi- 
vidual increases the population by one, he adds that 
much to the sum total of opportunities of acquiring 
wealth. In succeeding chapters it will be shown 
that practically all men, of whatsoever trade, busi- 
ness or profession, contribute directly to economic 
production, so called, and that even the minister 
must be placed with the rest of the economic pro- 
ducers. 

Anything which affords an opportunity to labor 
must also be classed as wealth. That the manual 
laborer must have tools with which to work is self- 
evident. That is, without the aid of a second factor 
manual labor is powerless. The farmer must have 
a farm; the artisan, tools and material; the me- 
chanic, a factory, etc. If a genius invents an 
article, the manufacture of which gives employment 
to labor; if a playwright produces a dram.a, which 
gives to members of the histrionic art employment; 
if a writer composes a book, which likewise fur- 



22 THE CREATION OF WEALTH 

nishes employment to printers and members of the 
craft — all of these must be considered as wealth. 
These men are a source of wealth and are illus- 
trative of the definition of wealth given, in the sense 
that their qualities are wealth-producing. 

It is also evident that anything which serves as 
a substitute for labor is wealth. A labor-saving 
machine is wealth. But a machine which requires 
but a comparatively small amount of labor to manu- 
facture may do the work of hundreds or thousands. 
What is represented in the difference between the 
quantity of labor required to manufacture the 
machine and the labor required to do the work 
without the machine? Manifestly, the idea upon 
which the invention was based. 

If people, individually and collectively, must be 
classed as general wealth, the question may be 
asked, what is the value of a man to the com- 
munity or to a nation? The answer is, he may be 
worth practically nothing, or he may be worth 
millions. The ordinary tramp is a liability rather 
than an asset, while the emanations from Edison's 
mind have taken the form of creative wealth which 
can not be estimated in dollars and cents. Between 
these two extremes are classes whose worth to the 
world vary in proportion to the wealth they produce 
by the labor of hands or mind. This will be eluci- 
dated further on.* 

Indirect wealth is potential wealth, whether it be 



*Will the economists who contend that man is not wealth please 
explain how ballplayers are sold for fabulous sums, and why it is that 
baseball writers refer to the $100,000 infield of the Philadelphia Ath- 
letics? 



WEALTH 23 

of a material or immaterial nature. It is the undis- 
covered and undeveloped resources of a country and 
the unused and unapplied talents and skill of man. 
While education is indirectly responsible for the 
marvelous industrial and commercial conditions pre- 
vailing to-day, yet it may be termed latent or indi- 
rect wealth. It is not a creative force except v/here 
the cause and effect are direct. Persons are edu- 
cated in a general v/ay, and the information thus 
accruing may be utilized in a number of pursuits. 
The economic results may be greater by pursuing 
one trade or calling than another. All are familiar 
with persons of high education who have but very 
little economic value. In its practical application to 
economic life, education is wealth. 

A distinction should be made between indirect 
and non-productive wealth. While indirect wealth 
is always non-productive wealth, the latter, in a 
great many instances, must be classed as wealth. 
For example, vacant and unused property in set- 
tled parts of the country is non-producing, yet it 
must be classed as direct wealth. It is taxed as 
such and can be sold for a consideration, whether 
it be great or small. 

Indirect wealth may be inherent in the indi- 
vidual, or it may be communicated to him from a 
person or thing. To illustrate, the natural powers 
or qualities of man, mental faculties, talent, strength, 
etc., are inherent, while acquired qualities, education, 
skill, knowledge, and the like, are communicated 
through persons or things — books, tools — and also 
through his struggles with animate and inanimate 
nature. 



24 THE CREATION OF WEALTH 

As applied to material things, indirect wealth is 
found in all potential commercial elements not 
utilized — the minerals in the ground, the unoccupied 
and uncultivated soil, the neglected pastures and 
forage on the Western plains, inventions not per- 
fected, magazines and newspapers whose space is 
not made use of by those who have things to sell, 
scenic beauties, and a thousand and one elements 
embodying opportunities to man. And, strange to 
say, these opportunities increase rather than de- 
crease with time, for the reason that economic life 
is becoming more complex with the advancing years. 



II. 

Capital. 

The economists tell us that land, labor and 
capital comprise the trilogy of wealth, with a little 
enterprise thrown in for good measure. In this 
chapter an effort will be made to determine the 
nature of capital; to find out whether it in reality- 
constitutes a living economic force, or whether it is 
not merely a man-made convenience, as all forms 
of money are. 

To simpUfy matters, imagine a state of society 
wherein all are endowed with infallible memories 
and unerring probity, or, in common parlance, 
where the word is as good as the bond. It is evi- 
dent that under these conditions all forms of money 
could be dispensed with. If A is employed by B, 
the latter will say at the end of the day, week or 
month, "I am indebted to you so many days of 
labor. If I have anything at the present time you 
can use, you can take it up to the value of the labor 
performed" (at an exchange price previously agreed 
upon), "If there is nothing in my store or in my 
possession you desire, go to some other place and 
tell the person in charge that I owe you for the 
labor performed and that he shall let you have 
goods to an amount not to exceed the exchange 
value of the labor performed by you." As every 
one has an unfailing memory and an unimpeachable 

25 



26 THE CREATION OF WEALTH 

reputation for honesty, there could be no confusion 
or theft. 

By eHminating money, a clearer knowledge of 
the manner in which mind produces wealth can be 
obtained. Money is desirable only as it enables one 
to procure things which he needs, wants or craves. 
If money is taken out of consideration as above 
shown, an individual will devise plans of exchang- 
ing his labor, manual or mental, for things desirable 
which others may be able to give him. Of course 
the prime needs are food, clothing and shelter. 
When these are secured, the individual looks around 
for something to amuse, benefit or please. Artists 
of various kinds, actors, musicians, authors and men 
of culture will be able to satisfy these desires. But, 
in so doing, these various entertainers will, in most 
instances, find it necessary to engage others to assist 
them. In a state of "no-money" these assistants 
will be given food, clothing and shelter, and, if 
their talents warrant, will perhaps be allowed extra 
compensation in the way of amusements or other 
forms of dynamic wealth. 

As a corollary to the above, it follows that indi- 
viduals obtain^ as a general proposition, what they 
desire or fit themselves for. If they have no ambi- 
tions above the animal, and only desire the prime 
necessities, that is probably all they will secure. If 
they have higher ambitions, by cultivating their 
minds they will be able to obtain more of their 
wants by being able to give others more in ex- 
change. 

Another corollary is, that the higher the civiliza- 
tion, the greater the wealth of a community. As we 



CAFirAL 27 

have shown, the more highly the people of a coun- 
try are educated or talented, the greater the demand 
for labor, and the more labor the more wealth. 

Now, capital is inert: it can not produce a single 
penny of its own accord. What about interest? It 
isn't the money or capital which makes the interest; 
it is the man who borrows the money and applies 
brains to manufacture, commerce, or other economic 
pursuits. Land is the only factor of the economic 
trilogy that will produce independently; as, wild 
fruit, nuts, etc. Labor must have material with 
which to work. 

Having shown that money can be dispensed with 
under certain conditions, and recognizing the axiom 
that capital, whether it be in the form of money, 
buildings, material, is inert and powerless to pro- 
duce wealth, let us try to determine the true nature 
of capital. It might be defined as the power or 
capacity to provide food, shelter, clothing, amuse- 
ments, or other desirables, for oneself and others. 
We have previously shown that, with money elimi- 
nated, exchanges will be made in terms of labor and 
desires. An individual conceives the idea of going 
into the manufacturing business, for example. To 
do so, he must control a sufficient quantity of neces- 
sities and utilities to exchange for labor. First, for 
the erection of the factory buildings; second, for 
procuring of stock and fixtures, and, third, for the 
operation of the plant. Or, if he does not control 
these things, he must be a man of such probity and 
capacity that laborers will know that his promise, 
whether written or verbal, is a sufficient guarantee 
of remuneration for their labor. Having such a 



28 THE CREATION OF WEALTH 

reputation, it will be an easy matter for him to 
secure the workmen. 

Suppose, after the factory has been in operation 
for some time, the ov/ner dies — what will happen? 
Unless some one can be found with a capacity for 
carrying on the business, it will finally collapse, 
although it may run for a greater or less length of 
time from its own inertia. Of course it will not 
run at all without a certain amount of brain work, 
managerial and clerical, but if a man of initiative 
and vision be not at its head, it will, in the long run, 
be outstripped by more progressive enterprises. 

Capital, then, in its essence, is the capacity for 
doing things, combined with strict integrity, or, in 
brief, it is represented by the terms character and 
capacity. 

Having eliminated all forms of money, what 
would be the natural result? The question would 
be then, not, "How much is he worth?" but, "How 
much labor can he control — what is the exponent 
of his brain power in the production of wealth?" 

To get away from the mechanical theory of 
wealth, let us imagine a people of a southern clime 
whose physical wants in the way of food and cloth- 
ing are easily obtainable. The question then would 
be, "What is his capacity for entertaining, as a 
musician, artist, actor or writer?" Or, broadly, 
"What has he got in his mind ?" that is, idea-wealth in 
the way of instructive and entertaining knowledge? 

Further along it will be shown how the intro- 
duction of labor-saving machinery, discoveries and 
devices, in manufacture and agriculture, has pro- 
duced a condition analogous to that just described. 



III. 

Divisions of Wealth, 

Wealth may be divided roughly into four classes ; 
namely, Static, Dynamic, Creative or "Ideaistic" and 
National. 

Static wealth represents the economic products 
of a quiescent or non-progressive people. Such 
wealth is produced in the endeavor to obtain pri- 
mary needs, and represents different things in 
different localities, climates and countries. For 
instance, considering food, clothing and shelter 
prime necessities, static wealth in America would 
mean plain food and clothing and a comfortable 
dwelling. In the islands of the Pacific it would 
mean various fruits and herbs for food, beads and 
a belt for clothing and a bamboo shack for shelter. 
In a word, it is a man's needs reduced to the lowest 
terms. 

Dynamic wealth is embodied in the concrete 
growth, or the materialized aspirations of man, and 
corresponds to the needs of his higher nature. Such 
needs may not necessarily be elevating or beneficial. 
Fine clothing, for example, may be classed as 
dynamic wealth. Broadly stated, this form of 
wealth is found in the accumulation of products 
arising from an advanced state of civilization, and 
would, therefore, have varied meanings, correspond- 
ing to the economic state of the people under con- 

29 



30 THE CREATION OF WEALTH 

sideration. A plain, hand-made shoe would be 
classed as static wealth in America, whereas, in 
Holland, a wooden shoe would be placed in that 
class and the leather shoe in the dynamic category. 

Creative or ideaistic wealth is that produced by 
mental effort. The classes producing this form of 
wealth are the inventors, scientists, chemists, musi- 
cians, orators, artists, actors, entrepreneurs, and the 
like. Ideaistic wealth is also represented in dynamic 
wealth. The latter may, in fact, be termed mate- 
rialized ideaistic wealth. An orator has his speech 
published, and it at once becomes dynamic wealth. 
An inventor conceives a useful or pleasing contriv- 
ance, and, when perfected, it becomes dynamic 
wealth, and so on with the other ideaistic occupa- 
tions. An inventor is paid thousands or tens of 
thousands of dollars for an invention. The actual 
labor involved in its manufacture may be inconsid- 
erable. It has been said that the Steel Trust has 
offered a million dollars to the person who discovers 
a way to utilize "breeze," or coke dust. Even 
greater offers have been made by railroad com- 
panies for a practicable concrete tie. 

The fourth economic division of wealth is that 
of national or natural wealth, and included in it are 
all of those qualities of nature which appeal to the 
jesthetic sense or are otherwise pleasing and bene- 
ficial to man. It may be defined as that part of 
nature, economically attractive, which is not included 
in the orthodox definition of land. It should, per- 
haps, be logically classed as land, or static wealth, 
but as it is not a fixed quantity and constitutes a 
value in which the entire nation may participate, it 



DIVISIONS OF WEALTH 31 

can more appropriately be classed as national wealth. 
It partakes of both static and dynamic wealth. In 
its materiality it is land; in its essence it has those 
qualities which form the basis of dynamic wealth, 
such as beauty, grandeur, etc. Its value to a coun- 
try is incalculable. 

Who can estimate, for example, the wealth Swit- 
zerland has derived from her entrancing mountains 
and lakes, or who can tell the worth of the Alps to 
Italy? It does not matter whether the wealth thus 
derived can be apportioned to the persons benefited 
— it is sufficient to know that the existence of these 
attractions affords an opportunity for the nations 
and their people to reap a harvest of gold. In con- 
sidering the wealth of nations these things must be 
reckoned with, whether or not the economists so 
regard them. 

To those who have spent an unforgettable, week 
amid the wonders of Yellowstone Park, the attract- 
ive power of nature is convincing. In attracting 
the sight-seers it necessarily attracts the gold, which 
the astonished visitor readily parts with. Among 
those benefited are the railroad owners, hotel- 
keepers and tradesmen generally. There died 
recently a man of great vision, combining the 
ideaistic and the practical genius. To David H. 
Moffatt, the "Empire Builder," Colorado owes its 
wonderful development more than to any other 
man. The "Moffatt" road is a monument to the 
genius of man working in harmony with the beau- 
ties of nature. Having scaled the mountain crests, 
it was Moffatt's ambition to tunnel under the 
Rockies in the perfection of his dream of a direct 



32 THE CREATION OF WEALTH 

line to the Pacific Coast. But for his untimely 
death, this, no doubt, would have been accomplished. 

For illustrative 
purposes, static -yJL- 7^ ^ )iL, 

wealth may be rep- y^ ^ ^ -^ 



resented by a series >^ ^ ^ ^ J£ 

of stars, each desig- ,^ w"^ ^^^ -^ w^ 

natinor nn inrli-v/irliial ^ ^d '^^ ^L. ^ ^ 



natinsf an individual, ^ JL "X" , -^ . V' ^^ 

ciety m an unorgan- ^ J^ ^ .^ ^ 

ized state, and a ^^^ -^ M.^^ 

people wherein each ^^ -M ^ W T 

individual secures a 

livelihood without the assistance of others, except, 
possibly, in some fortuitous way. The primitive man 
engaged in the pursuits of hunting, fishing and the 
gathering of wild fruits is the best example of this 
class. Semi-civilized, and even civilized, peoples are 
also represented in this class. For example, the 
American pioneers to a certain extent were indi- 
vidualistic. They hunted, cultivated small farms, 
spun their own clothing, made their own shoes, 
erected log huts, with or without the assistance of 
neighbors, and performed many other feats which 
the average citizen does not do now, because he can 
secure the results in an easier and more economical 
way. There were no factories, railroads, telegraphs 
or other meliorating concomitants of life as expe- 
rienced to-day. 

Dynamic wealth may be indicated by stars 
inclosed in circles, indicating that the individuals 
represented are benefited by the dynamic form of 



DIVISIONS OF WEALTH 33 

wealth which the circle may be made to stand for. 

Our illustration, therefore, will look something like 
this: 




Dynamic wealth may be termed altruistic. This 
does not mean necessarily disinterested benevolence 
or altruism, but is simply a recognition of the fact 
that dynamic wealth in helping the producer helps 
others. To illustrate: An individual, in going into 
the manufacturing business, must first employ 
workmen to assist him in erecting the factory 
building. This is aid to the needy number one, 
and may be represented by a small circle as above, 
enclosing a number of stars designating the men 
employed. 

Second, he must purchase equipment for the 
factory. This is aid to the needy number two. The 
men engaged in the manufacture of the machinery 
and other equipment will be given employment, and 
as different kinds of stock and fixtures will be 
required, the persons benefited may be represented 



34 THE CREATION OF WEALTH 

by a series of circles with stars, all enclosed in one 
large circle, thus: 




Third, the manufacturer must purchase raw 
material with which to make the finished product. 
He will thus give employment to a large number 
of farmers, stock-raisers, miners and others, who 
may be indicated by a very large circle containing 
stars. 

Fourth, he must employ men to run his factory, 
and the men thus benefited may be indicated by 
stars in a circle, large or small, according to the 
size of the factory. 

Fifth, incidentally he benefits all who may come 
in contact, in a business way, with the original 
beneficiaries, whose money must purchase the neces- 
saries as well as the luxuries of life. We are lost 



DIVISIONS OF WEALTH 35 

here in a maze of circles which we will not try to 
illustrate. 

Because of its far-reaching effects, neither can 
ideaistic wealth be represented or mechanically illus- 
trated. If an attempt were made, a circle enclosing 
a continent or a world would be required in a great 
many instances. Edison, the "Wizard of Menlo 
Park," has changed the face of the globe, and the 
creative wealth embodied in his prodigious activi- 
ties must be indicated by circles enclosing continents 
or by a tree or trees on which are grafted number- 
less branches through inventions and discoveries. 

But let us start at the beginning rather than the 
end of creative wealth, and endeavor to illustrate 
its workings. 

The dawn of ideaistic wealth was probably 
ushered in by the musician. Some inspired primor- 
dial Beethoven acquired, perhaps, the art of whis- 
tling. At first he may have been so enraptured and 
pleased with the acquisition that he charged nothing 
for the entertainment of the astonished and wor- 
shiping hoi polloi. Later, he conceived the idea of 
demanding some valuable in exchange for an exhi- 
bition of his art. 

After years of individual effort in his musical 
profession he formulated the brilliant conception of 
organizing a whistling band. He thereupon began 
the difficult undertaking of teaching others to 
whistle, and finally introduced to the public the first 
orchestra. This proved to be a far greater success 
than his individual efforts. Of course the ideaistic 
wealth is represented here in both the music, the 
improvisation ot which was necessary, and its pro- 



36 THE CREATION OF WEALTH 

duction, which required musical taste and skill. 
Strange to relate, neither land, labor nor capital was 
utilized in the primitive creative wealth-producing 
art. Play is here substituted for the factor of labor. 

If some object to this whistling band as unhis- 
torical and purely imaginative, a band or orchestra 
in which instruments are used can easily be imag- 
ined in its place. The instruments, naturally, would 
have to be of some rude sort, manufactured from 
a reed or some hollow material. The advantage of 
this latter representation lies in the fact that it prob- 
ably provided employment for more people, inas- 
much as the manufacture of the instruments would 
form a new occupation. 

Products of the mind — inventions, discoveries, 
etc. — hold a position in the realm of creative or 
ideaistic wealth similar to that of land in the mate- 
rial realm. The invention or discovery opens up a 
new field of labor, and, in most instances, reduces 
the price of commodities. The discovery of a new 
continent or new land similarly opens up such a 
field and reduces prices. 

National wealth is possible wealth. Like an 
apple or any commodity that is permitted to go to 
waste, it may become direct wealth by the injection 
of the fourth factor of wealth — the creative. Under 
this head are included all natural objects of merit 
and attractiveness not included in the definitions of 
land, which are usually defined as that portion of 
the earth of which industry has rendered either the 
surface or the mineral riches underneath available 
for human requirements. A landscape painting is 
classed as wealth ; the scene or portion of the earth 



DIVISIONS OF WEALTH 37 

of which the painting is a miniature is considered 
of no economic value. Perhaps this statement 
should be modified, for within the past few years 
the residents of Kansas City, Mo., discovered by 
experiment that natural beauty has a value. A sys- 
tem of boulevards was instituted there which gre^tiy 
enhanced the value of adjoining and neigWJoring 
property. But we believe this truth has not been 
recognized by orthodox economists. Adam Smith, 
in his "Wealth of Nations," did not take into con- 
sideration the wealth described. His oversight, 
however, is excusable, inasmuch as it is only in 
comparatively recent years that national wealth can 
be utilized in a wholesale or general way. The 
introduction of the railroads and steamships has 
made all parts of the world of easy access, and, 
while the beauties of nature are no more attractive 
now than before, nature can the more readily attract 
her worshipers. 

Do the economists contend that moving pictures 
or stereopticon views of natural wonders have an 
economic value, while the originals have none? Is 
the shadow greater than the substance? The mere 
statement of the proposition is a sufficient answer. 
The prime economic distinction is that in one case 
the shadow is brought to man, while in the ether 
man is conveyed to the reality. 



IV. 

Expression. 

The basis principle of ideaistic wealth is "ex- 
pression," It is proposed in this chapter to illus- 
trate the various forms and degrees of expression 
as exemplified in the arts, trades and professions 
and trace the progress of the individuals in their 
evolution from the mechanical laborer to the highest 
exponents of creativeness. 

Expression may be defined as the means by 
which the various forms of talent and genius are 
manifested. These may be manifested in an act or 
an object; i. e., expression may be purely psychical, 
or part mental and part physical. Musicians, ora- 
tors, actors and the like are representative of the 
class which uses the purely psychical forms of 
expression, while sculptors, painters, designers, etc., 
utilize part mental and part physical means of 
expression. 

The economists have practically ignored that 
form of wealth which emanates from mental 
processes. Starting with the absurd hypothesis that 
man does not constitute wealth, it is but natural 
that they should fail to take into account this form 
of economic productiveness. 

The term "expression," as used in this work, is 
a modification, or rather enlargement, of the term 
as applied to art, which is defined as the "develop- 

38 



EXPRESSION " 39 

ment and exhibition of character and sentiment in 
a work of art." The term as employed in art and 
kindred subjects has no reference to wealth, except 
indirectly; that is, stated generally, the greater the 
degree and quality of expression the greater its 
value. As a rule, subject-matter affords a more 
potential economic element than expression, as pop- 
ularly applied. But the word will be made to cover 
both the subject-matter and the form of expression. 
In brief, it includes all acts by which an idea or 
truth is expressed or manifested. 

Expression in itself does not necessarily consti- 
tute wealth. In fact, by far the greater number of 
ideas expressed, vocally or concretely, are of no 
economic value. The man and the idea are insep- 
arable and are of creative economic value in propor- 
tion to the appraisement put upon them by the 
popular mind. Expression, as here used, therefore, 
means the manifestation of ideas which have an 
economic value, and, as in the case of material 
objects, they may have a value at one time and 
place and be of no economic worth at other times 
and places. 

Perhaps no better illustration of the evolution 
or development of expression is afforded than in 
the case of the painter, or man with the brush. 
This class includes all grades, from the unskilled 
laborer or dauber who wields a whitewash brush, 
to the great painter or artist who depicts with 
inspired touch the highest thought and emotions. 

The whitewasher, or rough painter, has little or 
no opportunity for expression. He stands at the 
bottom rung of the ladder, and expression may here 



40 THE CREATION OF WEALTH 

be designated by a zero, either absolute or approxi- 
mate. His economic value has a mechanical basis, 
governed by the law of supply and demand. Indeed, 
he has to compete with machines invented to spray 
washes of different kinds on buildings. 

A grade higher is the house-painter. This class 
is required to use a certain degree of taste or 
expression in arranging colors, and it might be sub- 
divided into various grades, ranging from the 
unskilled to the skilled painter. The finer and more 
expensive houses or other structures to be painted 
call for a higher quality of brush-users, and the 
wages commanded are governed by the work 
done. 

The third division includes sign-painters, design- 
ers and similar brush artists who require greater 
technical skill and imagination than the preceding 
classes. These command a still higher wage. 

In the fourth division may be placed the portrait 
painters and scenic artists. This class has still 
greater technical ability and a more complex method 
of expression. Artists of this description do not 
work on a wage basis. Their remuneration depends 
upon the quality of expression shown in their work. 

In the fifth, or last, division are found the great 
artists who not only have imagination and technique, 
but also are endowed with that mysterious element 
designated as inspiration. These artists are the 
supreme geniuses who see things with the eye of 
the soul. It may be said that the value of their 
work depends more upon the subject-matter, the 
idea or inspirative quality, than the execution, 
although the latter is a very important element. 



EXPRESSION 41 

They labor for the love of their art, but their pro- 
ductions command the highest values. 

From the analysis given, it will be seen that 
there is no broad line of demarcation between the 
various forms of labor. On the contrary, the purely 
manual labor is, by easy steps, shaded into labor as 
expressed by the highest embodiments of intellect. 

The development from lower to higher classes 
might be similarly illustrated in other arts, trades 
and professions : the evolution of the artisan into 
the sculptor, the crude orator into the inspired 
actor, the composer of doggerel into a great poet, 
the manager of an inconsequential business to a 
captain of industry, and so on ad libitum. 

We might stop here and deduce the general 
proposition that if mental activity has a great value 
in the simple trades and professions, it has a far 
greater value, in an economic way, in the case of 
the business man or entrepreneur. The painter or 
artist has only a few elements to contend with, 
whereas the entrepreneur deals with a great variety 
of men, conditions and things. It follows that a 
high order of mind is required in the successful 
prosecution of a big business enterprise. This 
thought will be elaborated in the chapter on "The 
Entrepreneur" and also in other sections of the 
treatise. 

The mind of man is a veritable mine of magic 
wealth. The real-estate dealer, for example, sees 
a tract of land adapted to some particular economic 
use, and by his powers of imagination or vision is 
able to conjure in his mind's eye the aspect the 
locaUty will assume in ten, twenty or thirty years 



42 THE CREATION OF WEALTH 

hence. Perhaps the property forms a suitable site 
for a city, or a large manufacturing plant, or it may 
be that its value is principally scenic, and the pro- 
moter has a vision of the multitudes who will be 
attracted hither if a railroad be extended to this 
land of wonder and beauty. 

These are ultra examples of ideaistic wealth, 
and are cited as such. More obvious examples are 
the products of inventors, chemists, scientists and 
other intellectual classes. 

Having shown how a mechanical laborer is 
evolved into an artist of great creative power, we 
will now, in order to further illustrate the economic 
value of the idea, reverse the process and trace the 
various aspects of ideaistic wealth in industrial and 
commercial life, through its form of expression; 
namely, inventive skill or ingenuity. That which in 
the arts is known as inspiration is, in the recognized 
economic pursuits, designated as invention. 

The term invention may be applied to a machine 
or an apparatus as a whole, or to one of its parts. 
Likewise, in business life the term may be applied 
to the project in its entirety or to ways and means 
devised to promote the enterprise. 

The entrepreneur may be compared with the 
inventor who has designed a complicated machine. 
First, there is the idea, the general plan or scheme 
of the invention or enterprise ; second, follows the 
construction of the machine or economic plant; and, 
third, there is the assembling of the parts, and, 
fourth, the actual operation. 

The entrepreneur, while not an "expressionist" 
in any common acceptance of the term in his nat- 



EXPRESSION 43 

ural and primary field of labor, is, nevertheless, 
economically considered, one of the most powerful 
exponents of expression. His powers of imagina- 
tion, ingenuity, invention, etc., are taxed to the limit 
in the daily operation of a business. He may not 
have modeled or painted the work of art, or 
designed the beautiful or useful article of com- 
merce, yet with a discerning eye he sees the value 
of the product, and by the exertion of all his 
powers places it before the public, that all may be 
benefited. 

Stated broadly, the idea, whether it be in the 
shape of an invention, discovery or business project, 
is generally what is materialized as "watered stock" ; 
that is, it represents the value of a business or com- 
mercial enterprise ulterior to the cost of labor and 
material used in the construction of the thing to be 
promoted. 

Mind or creative energy is a source of wealth 
in the so-called productive pursuits in an almost 
endless number of ways. An attempt will be made 
to classify at least a majority of such methods, 
under a few general heads. It is understood, of 
course, that the author does not recognize the clas- 
sification adopted by economists relative to product- 
ive and non-productive pursuits or enterprises. It 
has previously been shown that the useful and the 
aesthetic, or the physical and the psychical, are 
inseparable, and if the sense of the beautiful or 
artistic is partly gratified in some material object, 
there is no valid reason why it should not be grati- 
fied in immaterial manifestations. 

The latter phase of the science will be more 



44 THE CREATION OF WEALTH 

elaborately treated in succeeding chapters. It is 
proposed now to enumerate some of the ways in 
which mind enhances industrial efficiency in pro- 
ductive enterprises. 

First, by discovering-, inventing or conceiving 
something which opens up new fields of labor. This 
is the most important method of creating wealth, 
and it is utilized by the entrepreneur, inventor and 
various kinds of discoverers, scientists and men of 
research. 

Second, by the adaptation of labor-saving 
devices or plans to the operation of a business. 

Third, by the introduction of material-saving 
devices or ideas in the way of substitution or elimi- 
nation. For instance, the inventor of wireless 
telegraphy eliminated wires. The railroad builder 
saves material by eliminating curves, etc. 

Fourth, by the manufacture of a better or more 
durable article. If a process is discovered whereby 
an article is made to endure longer than one it sup- 
plants, it is plain that an economic benefit to the 
purchaser results. 

Fifth, by the introduction of processes and 
methods of treating land, or by the scientific selec- 
tion of crops, to render it more productive. It is 
apparent that if land is made to yield a greater 
return it is equivalent to increasing the quantity of 
land. 

Sixth, by increasing the efficiency of the laborer. 
This does not apply to labor-saving machinery, but 
to methods adopted by manufacturers or business 
men to increase the output per man by intelligent 
handling. This method is included in the scientific 



EXPRESSION 45 

management and efficiency methods of Frederick 
W. Taylor, Harrington Emerson and others. 

Seventh, by the practical annihilation of time 
and space. "Time is money" in the sense that it 
is one of the essential elements in economic life. In 
fact, wages are based upon time. Of course, the 
annihilation of space is equivalent to the annihila- 
tion of time. If, by rapid communication or trans- 
portation, space is practically eliminated, it means 
the saving of time. It will readily be conceded that 
this method of facilitating the creation of wealth is 
one of the most powerful and effective of all com- 
mercial processes and appliances. Some of the 
great time and space annihilators are the telegraph, 
telephone, railroads, steamships, airships, pneumatic 
tubes, motors, pipe lines and methods of signaling. 

Eighth, by the elimination of "waste" or "dis- 
ease" in the conduct of an enterprise. 

Ninth, by advertising (promotion, opening mar- 
kets, etc.). Wealth in its subjective phase is 
embodied in a desire or need. Objectively, it is the 
satisfaction of that desire or need. Therefore, if 
an entrepreneur, by the clever setting forth of the 
advantages of a given commodity, creates a state of 
mind in the reader which later becomes an over- 
mastering desire to purchase, he has thereby created 
wealth. 

Tenth, by the eradication of diseases in man and 
in the animal and vegetable kingdoms. Considered 
from an economic point of view, man may be 
classed as a machine. If, by the introduction of 
sanitary methods or hygienic methods, the health of 
the employees of a factory is enhanced, enabling 



46 THE CREATION OF WEALTH 

them to turn out a greater quantity and quality of 
work, such methods must be considered wealthy 
producing. But it will be granted without argument 
that curative or alleviating processes applied to a 
tramp do not constitute economic acts. 

Eleventh, by the melioration of economic envi- 
ronments ; as, for example, by the passage of favor- 
able laws, introduction of transportation facilities 
and the like. 

Allied to the conservation of health is the intro- 
duction of means to make life more pleasant to the 
employee. Many large firms have installed rest and 
recreation rooms for their workmen, while others 
have introduced entertainments of various kinds. 
These employers recognize that health and good- 
will in the laborers are what lubrication and scien- 
tific adjustment are to machinery. 

However, the twilight zone between wealth and 
non-wealth is here reached. The methods are 
wealth-producing or otherwise, depending, of course, 
upon the actual effects in an economic way. 

Primarily, there are three ways in which the 
average man can be benefited. First, the idle may 
be given employment; second, the employed may be 
granted an increase in wages; third, the cost of 
necessities, more or less useful, may be reduced. It 
follows that any idea, discovery, invention or enter- 
prise which accomplishes any of these three desid- 
eratums is an economic boon and a form of creative 
wealth. It does not matter whether we can trace 
these various benefits throughout their ramifications 
to the ultimate beneficiaries, or estimate the exact 
value of them in dollars and cents. 



EXPRESSION 47 

But perhaps a more logical classification of 
"expression forms" or "efficiency methods" (depend- 
ing upon whether they are considered subjectively 
or objectively) would be in reference to the units 
or factors of production, which will be designated 
as labor, material, land and time. Material includes 
all forms of capital, buildings, stock and output. In 
addition to these factors, the operation of an enter- 
prise as a whole must be taken into consideration. 

Illustrative of the manner in which mind can 
affect or influence the several factors of production, 
there are three things which can be done to labor, 
the first unit under our classification. We can save 
labor, through labor-saving devices and plans ; we 
can augment labor, through the modern as well as 
long-established efficiency methods, and we can cure 
labor of ills or remove deleterious environments or 
influences. 

Similar methods can be applied to the other 
factors of production, although exceptions must be 
made in a few cases. For example, we can save 
time, but we can not augment or cure it. But we 
can cure material; as, for instance, if a knife 
becomes dull, it can be sharpened, or if machinery 
becomes disordered or sick, it can be adjusted. As 
applied to the operation of a plant, all of the 
efficiency methods may be used with the exception 
of saving, and, in addition, two other efficiency 
methods may be applied ; namely, the manufacture 
of a better article and the melioration of economic 
environments. All of these different methods will 
be fully illustrated and elaborated in succeeding 
chapters. 



48 THE CREATION OF WEALTH 

We find, then, that there are fifteen efficiency 
methods which may be applied to industrial or 
economic life, as follows: 

First, creation, discovery or invention (the initial 
vision, plan, perception or uncovering of a project, 
thing or device to be exploited). 

Second, labor-saving devices and plans (con- 
crete or abstract). 

Third, material-saving devices and plans (elimi- 
nation or substitution). 

Fourth, land-saving devices (reclamation, by 
irrigation, drainage, reforestation, etc.). Of course 
there is no substitute for land in any real sense. 

Fifth, time-saving devices and plans. 

Sixth, labor-augmenting devices and plans (by 
the so-called "efficiency" methods, elimination of 
useless motions, etc.), distinguished from labor- 
saving devices in that they "speed up" the worker 
without reference to machinery. 

Seventh, material-augmenting devices and plans 
(methods of "speeding up" machinery, more scien- 
tific arrangement and handling of factory equip- 
ment, including office fixtures). This also includes 
methods of increasing the value or quantity of 
products in their manufacture or production. 

Eighth, land-augmenting devices and plans 
(methods of increasing the productivity or value 
of land). 

Ninth, eradication of diseases or other delete- 
rious influences in the laborer. 

Tenth, eradication of diseases or other delete- 
rious influences in land and land products. 

Eleventh, eradication of deleterious influences in 



EXPRESSION 49 

material (maladjustment, worn but repairable con- 
ditions, etc.). 

Twelfth, elimination of waste, "disease," in the 
operation (obstructions internal and external, bad 
methods of conducting business, friction, etc.). 

Thirteenth, advertising or promotion (augmenta- 
tion of business through various methods). 

Fourteenth, manufacture or production of a 
more durable, serviceable or attractive article. 

Fifteenth, melioration of economic environments. 
This method applies particularly, although not 
wholly, to governmental legislation affecting eco- 
nomic conditions. 

It will be observed that the last four methods 
apply exclusively to the operation of a plant or 
enterprise. Some may confuse one or more of the 
preceding methods with the latter, but all doubts 
can be removed by asking the question, Does the 
result obtained affect a factor of operation alone, 
or a general policy of management? For example, 
it may be asked, What is the distinction between the 
seventh efficiency method (material-augmenting) 
and the fourteenth (manufacture of a better arti- 
cle) ? The answer is that the first, in addition to 
other things, increases the value or quantity of a 
product incidentally or in isolated instances, while 
the latter is the outgrowth of a general policy to 
manufacture or sell the best article possible in order 
to please and benefit the customers. Subjectively, 
it may augment business — i. e., increase profits — or 
it may result otherwise. Essentially, it is a method 
of business promotion, for it is one of the most 
effective ways to increase sales, and it would be 



so THE CREATION OF WEALTH 

more logical to classify it under advertising or pro- 
motion than under material-augmenting. It consti- 
tutes such an important element of economic pro- 
duction that it was thought best to give it a separate 
classification. 



V. 

Who and How? 

Who, then, are the "expressionists" or exponents 
of "efficiency methods," and in what manner do 
they promote economic Hfe? A complete list would 
perhaps comprise all working classes. The non- 
workers — those who will not work, those who are 
imable to find work and those who are unable to 
work — only promote economic life in a negative 
way; that is, they belong to the great consuming 
class. 

An attempt will be made in this chapter to 
enumerate the principal classes of pure expression- 
ists or intellectual workers, and to determine, by 
reference to the analysis in the preceding chapter, 
how they enhance the economic Hfe of a country or 
the world. 

A gentleman, scholarly and resourceful, was 
compelled to leave his home in the East and migrate 
westwardly for his health. He had previously taken 
a trip through the West, and, while there, having 
an intimate knowledge of geology, made a study of 
the rock formations in one particular locality in 
which he was interested because of the extreme 
fertility of the soil. This land, however, which con- 
sisted of a barren tract of several thousand acres, 
was sans aqua, satis flora and sans fauna. All 
attempts to irrigate it had failed. This prospector 

51 



52 THE CREATION OF WEALTH 

believed, from his geological researches, that water 
could be found if a well were sunk at a certain 
place to a certain depth. He accordingly employed 
a well-driller with the unshaken faith that water 
would be struck in sufficient quantities to irrigate 
the tract of land. The well was sunk, and lo, water 
gushed forth from the shaft in great volume. 

Here, then, we have an illustration of "creation" 
or discovery ("expression form" number 1). The 
very instant his faith became fact, great possibilities 
in agriculture were opened up. He had a vision 
and made it come true, regardless of obstacles. 

Our progressive farmer began at once to con- 
struct flumes and dig ditches for irrigation purposes. 
Having nothing but picks and shovels for excava- 
ting, he found the work progressing very slowly. 
He had a plow, but no horses. Learning of a drove 
of wild horses in the neighboring mountains, he 
enlisted the services of cowboys in another section 
to capture some of the horses. This was accom- 
plished after considerable difficulty. He attached 
the horses to his plow, which superseded picks 
and shovels as a mode of excavation for the 
trenches. This was efficiency method number 2 
(labor-saving). 

This worked all right for a time, but he finally 
struck some very hard ground, interspersed with 
rock. With some giant powder which he had 
brought with him he proceeded to blast out trenches 
in the callous places along the lines he had mapped 
out. This was efficiency method number 3 (first, 
by substituting a more effective excavating instru- 
ment, and, second, by going- througfh, instead of 



WHO AND HOW? S3 

around, the rocky places, he saved the material of 
which the flumes were to be constructed). 

After completing the irrigation system, our pro- 
gressive farmer turned on the water, resulting in a 
perfect realization of his dream. This constituted 
efficiency method number 4 (land-saving, reclama- 
tion). 

Having a large acreage, he found it necessary 
to employ a great many men to prepare the ground 
for planting. To expedite communication between 
the foreman and subordinates, a telephone system 
was installed on the ranch. This was efficiency 
method number 5 (time-saving). 

Finding that the labor of his men was not as 
productive as he had reasons to believe it ought to 
be, and having read Taylor's and Emerson's treat- 
ises on eliminating useless motions embodied in 
scientific management, he applied the theories to his 
force of men, with the result that all became much 
more proficient. This was efficiency method number 
6 (labor-augmenting). 

One of the principal products raised was the 
sugar beet, and, having become dissatisfied with the 
quantity of sugar produced and having learned that 
the Germans had discovered a chemical process 
whereby the quantity of sugar extracted from the 
vegetable was greatly increased, he applied the 
process with the result of "materially augmenting" 
his production of sugar. This, of course, was 
efficiency method number 7 (material-augmenting). 

Upon analysis, he discovered that some of the 
soil on his farm v/as wanting in nitrogen. He 
thereupon erected an electric plant to extract nitric 



54 THE CREATION OF WEALTH 

acid from the air by the newly discovered electric 
process, and thereby realized efficiency method num- 
ber 8 (land-augmenting device). 

About this time an epidemic of a severe nature 
became prevalent among his employees. He min- 
imized the virulence of the disease by the adminis- 
tration of vaccine serum. This was efficiency 
method number 9 (eradication of diseases in the 
laborer). 

His crop of growing potatoes was besieged by 
the Colorado bug. He ordered his men to sprinkle 
paris green on the plants, thus destroying the insects. 
This was efficiency method number 10 (eradication 
of deleterious influences in land products). 

In harvesting his wheat, he discovered that he 
had failed to secure a grindstone with which to 
sharpen his sickles and knives. He found a stone 
on his farm of suitable quality and from it a grind- 
stone was improvised. This was efficiency method 
number 11 (eradication of deleterious influences in 
material). 

A tribe of Indians came down from the moun- 
tains and made a raid on his growing crops, carry- 
ing away and destroying a large quantity, and 
threatening to destroy the buildings and occupants. 
Our scientific farmer stole out to their tent in the 
night, and, with a charge of giant powder, blew up 
the camp. This was efficiency method number 12 
(elimination of friction in operation, or, rather, 
external obstruction). 

Later on the products of the farm had increased 
to such a degree that it was difficult to find a mar- 
ket for them. By advertising in the newspapers 



WHO AND HOW? 55 

(number 13) the superiority of his products, some 
of which had been perfected through Burbank's 
methods (number 14), he found no difficulty in dis- 
posing of them at good prices. 

In the meantime, through his agitation and gov- 
ernmental aid, capitalists had constructed a railroad 
through his tract of land, which constituted 
efficiency method number 15 (melioration of eco- 
nomic environment). 

The precise function of the lawyer in the indus- 
trial world has been a source of considerable worry 
to the author, as he has a number of valued friends 
in that class. It will be admitted a person does 
not employ an attorney for the "fun of it." His 
economic value, therefore, lies outside the hedon- 
istic or aesthetic circle. In what, then, does his 
economic worth consist? Of the fifteen ways 
enumerated by which mind assists in producing 
wealth, all were readily cast aside as inapplicable, 
with one exception. This was number 12, or elimi- 
nation of waste in operation. Herein lay the 
answer. But how does an attorney eliminate waste? 
By removing friction. 

Friction is a term that may be applied to the 
machinery of a plant, in the rubbing of parts 
together, or to relations, proprietorial or mana- 
gerial, in its every-day operation. If friction — dis- 
putes or controversies — arise between business men 
involving legal phases, it becomes necessary to 
employ legal experts to remove the friction in order 
that there be no economic waste. 

It should also be remembered that many attor- 
neys are chosen to represent the people in legisla- 



56 THE CREATION OF WEALTH 

tures and Congress and thereby render economic 
service in a more general way. In fact, it is in this 
manner that they contribute most largely to the real 
science of "Political Economy." The passage of a 
tariff or currency bill, for example, directly affects 
the status of the industries of a nation, and indi- 
rectly the entire people of that country. This serv- 
ice would fall under efficiency head number 15 
(melioration of economic conditions). 

Having found an honorable niche for the disci- 
ples of law in the economic superstructure, the 
placing of other professions, trades and pursuits 
ought to be easy. The function of the physician 
naturally falls under the ninth efficiency method 
(eradication of diseases and removal of deleterious 
influences of a contaminating nature). As we have 
seen, man may be classed as a machine, and if he 
"breaks down," to "mend" him is plainly an eco- 
nomic function. Physicians, bacteriologists and 
scientists render valuable services in laboratory 
work — in the discovery of causes of diseases and 
contagions, and in the compounding of medicines 
that will cure, and in the preparation of serums 
that will render persons immune from attack. In 
Panama, a Gorgas had to conquer the mosquito 
before a Goethals could conquer Culebra. 

"But what about the preacher?" some one may 
ask; "surely he can not be classed as a wealth- 
producer." Why not? The function of the minis- 
ter is akin to that of the physician ; the latter eradi- 
cates diseases of the body, while the former 
administers to ailments of the soul. Shall the man 
who instills into youth the moralities be considered 



WHO AND HOW? 57 

of no economic value? Then, again, the minister 
must be considered an economic factor because he 
satisfies a desire or need. Religion to the average 
person is a necessity and affords greater happiness 
and consolation than all the arts, sciences and 
economies. The preacher builds character, the very 
corner-stone of all economic superstructures. The 
minister, then, also comes under the head of 
efficiency method number 9, and treats psychical and 
other influences of a deleterious nature affecting the 
laborer. 

The teacher, from an economic point of view, 
indirectly, and, in a great many instances, directly, 
plays a stupendous part in the general enhancement 
of industrial and commercial life. Included in this 
classification are instructors in physical and manual 
training. It can readily be seen how vocational 
training, which is becoming more and more in 
vogue with passing years, leads to more direct 
results in efficiency methods. The teacher combines 
the functions of the preacher, to a certain extent, 
with the scientific manager. He inculcates princi- 
ples of self-reliance and manly virtue, and educates 
and trains the youth in practical branches of learn- 
ing. The teacher also, through his superior knowl- 
edge and culture, should educate his pupils to a 
broader understanding of the general principles 
governing economic life, and thereby produce a 
melioration of industrial environments. The effi- 
ciency methods of the teacher, therefore, may be 
classed under the sixth, ninth, tenth and fifteenth 
divisions, and, in specific instances, his teachings 
may affect any other method. 



58 THE CREATION OF WEALTH 

The musicians — the mere mention of them in 
connection with business affairs no doubt causes an 
agitation of the risibilities — are also here. It has 
recently been proven that music has a sort of lubri- 
cating effect upon the "living" machinery. A num- 
ber of firms have introduced various forms of music 
in their plants for the benefit of their employees, 
while one proprietor, according to reports, went so 
far as to engage an orchestra to play at stated inter- 
vals. At these times operation of the plant would 
be suspended, and the girls employed would join 
hands and dance to the musical strains provided by 
the orchestra. It is found that these exercises tend 
to relax both the mind and body and that they are 
conducive to more friendly relations between the 
employer and the employed. Then, considered gen- 
erally, who can tell what "savage breasts" a Lind 
or a Patti has soothed into calm and peace? The 
economic function of the musician would seem, 
therefore, to come under two heads, the sixth and 
ninth, the augmentation of labor and the removal 
of deleterious influences. 

The actors, playwrights and other exponents of 
the histrionic art may not have a direct influence on 
the so-called economic activities except in particular 
instances, yet the art of Shakespeare and all the 
brilliant train of dramatists has entertained and 
inspired millions, and no doubt given them a more 
cheerful outlook on life in general. But, aside from 
this, out of the art has arisen temples to Thespis in 
every civilized land, thereby providing employment 
for myriads of artisans and artists, as well as 
employees. 



WHO AND HOW? 59 

The playwrights and players produce a great 
variety of things theatrical — dramas, tragedies, com- 
edies, problem plays and those dealing with great 
moral and social questions. While the first three 
classes of histrionic productions may not have any 
special bearing on res economic, the others do, in 
some degree at least. Great artists, touched with 
"divine fire," can, in depicting and visualizing 
phases of life affecting the humanities or social or 
political problems, imbue their auditors with the 
love of truth and justice and all that waters and 
causes to blossom anew the mercies and moralities 
of men. 

The stage, therefore, is represented in the eco- 
nomic superstructure under efficiency methods num- 
bers 1, 9 and 15 (creativeness, eradication of dele- 
terious influences and melioration of environments). 

With the playwrights and representatives of the 
thespian art may be classed, in a general way, all 
authors, writers and orators. All of these classes 
have a powerful influence for good, and (sad to 
relate) evil. Knowing their power, they should 
have a care, for it may be that, instead of meliora- 
ting the conditions under which men struggle, 
through their presentations and discussions, these 
conditions may become more insufferable and intol- 
erable. Of course didactic writers have a wider 
scope and may deal with any of the fifteen methods 
of efficiency. 

The psychologists, phrenologists and physiog- 
nomists may be grouped together, and, as far as 
their direct influence on economic life is concerned, 
the term "applied psychology" may be used. Hugo 



60 THE CREATION OF WEALTH 

Munsterberg, in his "Psychology and Industrial 
Efficiency," says a new science is developing between 
the modern laboratory psychology and the problems 
of economics. The objects of the new science are 
twofold — to analyze definite economic tasks with 
reference to mental qualities which are necessary 
or desirable for them, and to find methods by which 
these mental qualities can be tested. 

The direct application of psychology to indus- 
trial life has been made by Harrington Emerson, 
F. W. Taylor and others, with remarkable results. 
Most thoughtful readers are familiar with their 
efficiency methods and the results of their experi- 
ments need not be recited here. This phase of 
economics is an interesting one, but it still remains 
to be determined to what extent it is practicable to 
introduce these methods into the general economic 
life. Whether it is best to sacrifice or subordinate 
all the qualities that enter into one's personality for 
the sake of "efficiency," is a moot question. 

These efficiency methods have principally to do 
with labor-augmentation, and therefore are embod- 
ied in our sixth efficiency method. Of course, in 
its broadest application, psychology, or the science 
of the mind, has a direct or indirect concern with 
the entire gamut of ideaistic production, and it will 
not be necessary, therefore, to classify the expo- 
nents of this branch of science in their economic 
application. 

We now come to the formative or fine arts — 
architecture, sculpture and painting, and their rep- 
resentatives in the architect, sculptor and artist. It 
is not necessary to deal with these from the prac- 



WHO AND HOW? 61 

tical angle, for the architect, painter, etc., are recog- 
nized factors of production, as much so as the 
carpenter or bricklayer. We are only concerned 
with the aesthetic phase or aspect, and, as it has 
previously been shown that beauty and other similar 
qualities have an economic value, it will be neces- 
sary to elaborate only one or two points. 

One can readily understand how (and history 
confirms the assertion) the development of these 
formative arts lead to a maze of dynamic structures 
and groups of architectural wonders. From the 
arts of the Greeks and the Romans came the 
Acropolis, the Parthenon and the Pantheon and the 
marvelous cathedrals of later times. The modern 
world has its examples in nearly every country — in 
Paris, Milan, Vienna, St. Petersburg and in numer- 
ous cities in the Americas, North and South. 

The economic functions of this group will natu- 
rally fall under the first and fourteenth divisions — 
the creative (in its specialized sense) and the mak- 
ing of a better or more attractive product. 

Allied to these are the decorative artists, design- 
ers and the like. These create new designs and 
models pleasing to the aesthetic taste, and naturally 
play no small part in industrial life. In addition 
to embodying efficiency methods numbers 1 and 14, 
they also embrace number 13 (advertising) ; namely, 
as window decorators, sign-painters, etc. 

The initial function of the civil engineer is to 
remove deleterious influences in land (efficiency 
method number 10). This deleterious influence con- 
sists of undivided land; /. e., a condition of "con- 
glomerate mass," and it is expedient that experts 



62 THE CREATION OF WEALTH 

be called into service whose specialty is "land 
division," to avoid disputes between adjoining prop- 
erty-owners. This latter possible condition is em- 
bodied in efficiency method number 12 (external 
obstruction, or "disease," in operation). 

Civil engineers employed in large industrial and 
commercial enterprises employ other "expression 
forms" or efficiency methods. In laying out a rail- 
road line, for example, they frequently "save labor" 
(number 2) and "save material" (number 3) by 
eliminating curves, tunneling, etc., and, in industrial 
pursuits, not only show how labor and material can 
be saved, but also recommend ways of "speeding 
up" machinery (number 7, material-augmenting). 
In addition to these results, in many instances 
efficiency method number 5 (time-saving) is also 
brought into play. The elimination of a curve, for 
example, in a railroad not only saves labor and 
material, but also saves time in the operation of 
the trains. 

"Efficiency engineers," of which we read so 
much in these latter days, lay particular emphasis 
on "speeding up" laborers (efficiency method num- 
ber 6). They also give expert advice in saving and 
augmenting material (numbers 3 and 7), and in 
eliminating deleterious influences in the material of 
a plant (number 11). 

Meteorologists, whose economic exponents are 
the members of a weather bureau, perform a very 
valuable service in preventing waste in land, or land 
products, in material and in labor. By predicting 
storms, tornadoes and other meteorological disturb- 
ances, ship-owners, sailors generally and agricul- 



WHO AND HOW? 63 

turists are enabled to protect, in some degree, their 
property from loss. The science has not been per- 
fected as yet, and probably never will be, for the 
reason that the atmosphere and other elements 
entering into the causation of weather are very 
unstable and uncertain quantities. 

The economic functions of the meteorologist 
may be classed under efficiency methods numbers 9, 
10 and 11 (eradication of deleterious influences in 
labor, land and material), in consideration of the 
fact that prevention is tantamount to a cure. If a 
person or thing is prevented from being destroyed 
by a storm, the existence of that person or thing 
is spared, which, of course, is equivalent to being 
cured of a fatal ailment or defect. 

The physicists, through their investigations into 
the natural properties and latent forces of material 
things, have laid bare principles and powers, the 
results of the application of which to industrial life 
are seen in the world to-day. From Archimedes to 
Edison, Marconi and Roentgen, a numerous galaxy 
have, by their researches, revealed the hidden forces 
of nature, all of which have contributed to the 
development of economic life. 

All are familiar with the five mechanic powers — ' 
the lever, pulley, wheel, inclined plane and screw — 
without which the man-made earth would not move. 
On top of these were discovered the principles of 
statics and dynamics as applied to liquids and gases, 
and then came Franklin toying with a kite sus- 
pended in the clouds, from which he drew an elec- 
tric spark that indirectly led to subsequent electrical 
discoveries that have transformed the world. This 

5 



64 THE CREATION OF WEALTH 

was followed by the discovery of the vibratory 
nature of sound, and from the two discoveries have 
evolved the wonderful telephone and allied inven- 
tions, the phonograph and modifications, musical 
and entertaining-. 

The physicists, by calling to their aid higher 
mathematics, have computed the strain and stress, 
resistance of various kinds of compression, bending, 
crossbreaking, twisting, etc., of materials used in 
the arts and manufactures, enabling the practical 
builders to select the best kinds of materials, in 
reference to service and economy, for their partic- 
ular work. The physicists also compute the inherent 
forces of liquids and gases, static and dynamic, by 
means of which enormous weights are lifted, and 
boats, railroad trains and motor vehicles of all kinds 
are propelled swiftly over the earth, through the 
water or in the air. The various kinds of powers 
used include hydraulic and hydrostatic, expansion 
of steam and other gases, and turbine (water and 
gas). By the application of the static pressure of 
gas in the invention and manufacture of the air- 
brake, the rapid running of railroad trains has been 
made comparatively safe. By the aid of these 
forces mountains are tunneled, rivers spanned and 
canals dug, and the desert is made to blossom as 
the rose. 

The marvelous things performed by electricity 
are of common knowledge. How it eliminates time 
and space in carrying our messages across land and 
seas; how it lights and heats our buildings and 
illuminates our public ways ; how it turns the 
wheels of manufacture in a thousand industrial 



WHO AND HOW? 65 

centers, and propels cars and all sorts of motor 
vehicles carrying tremendous loads with perfect 
ease — all know, if they do not understand. While 
the physicists did not apply these forces to the work 
of modern life, yet they revealed and laid bare 
these, the tools of industrialism, at the feet of the 
inventors and captains of industry. 

There are three forms of electricity which are 
used in medicine — static, galvanic and faradic. The 
static form modifies and regulates functional proc- 
esses, including respiration, circulation, nutrition 
and the secretions. Galvanism is applied to the 
treatment of many conditions and diseases of the 
nervous system, and is also of the greatest use in 
the diagnosis of disease. In surgery, it is applied 
to the destruction of tumors and growths of a sim- 
ilar nature. Faradic electricity is useful in cases of 
paralysis, gout, rheumatism, eczema and hypochon- 
driacal manifestations. 

The microscope and its application to photogra- 
phy has been of untold benefit in bacteriological 
investigations appertaining to both animal and vege- 
table life. 

The culture of plants under electric stimulus is 
a subject of interesting experimentation. It has 
been found that by the application of electric light, 
by means of arc-light or ultra-violet rays, the 
flowering period of plants is hastened, in some 
instances, as much as ten days, and it is believed 
that the practical utilization of electric light in 
horticulture will prove of great service to florists 
and truck farmers. 

Electro-chemical processes are employed in ex- 



66 THE CREATION OF WEALTH 

tracting metals from their ores, and in parting them 
from their alloys; in the deposition of certain finer 
metals upon the surface of baser metals and other 
materials, and in the manufacture of chemical prod- 
ucts employed in the arts. 

Radium and other radio-active elements recently 
discovered are destined to play an important part in 
surgery and the practice of medicine. The Roent- 
gen rays, by revealing hidden lesions, growths and 
fractures, have already rendered invaluable service 
to the medical science, and now comes the report 
from Germany that mesothorium is a panacea for 
cancer. This radio-active substance is obtained 
from thorium waste in the manufacture of gas 
mantles. For therapeutic use a tiny particle is 
enclosed in a silver covering pierced with minute 
holes. Recently it has been asserted with more or 
less positiveness that radium is curative for some 
forms of cancer. 

It will be seen that the physicist covers a wide 
field in the industrial world, and, directly or indi- 
rectly, affects production under the following 
efficiency heads: First, second, third, fourth, fifth, 
eighth, ninth, tenth and eleventh. 

The activities of the chemists are so varied and 
widespread that it will be difficult to do them jus- 
tice in a work of this kind. The chemist, by deep 
research, discovers and compounds formulas useful 
in the arts, professions, agriculture and manufac- 
tures, and the joint work of the chemists and bac- 
teriologists have done much toward the alleviation 
of human ills. 

Applied chemistry, with which we are more par- 



WHO AND HOW? 67 

ticularly concerned, comprises all the facts and 
methods of the science that finds practical employ- 
ment, and includes the biological treating of phys- 
iological and pathological phenomena in animals and 
plants, and with the uses of chemical discoveries in 
the arts and industrial pursuits. 

A very interesting and valuable phase of the 
chemists' activities has been in the direction of dis- 
covering new elements, of which there are now 
known to science upwards of eighty, although a few 
of the more obscure elemental substances are sub- 
ject to dispute. After exhausting all of their 
resources in the way of chemical analysis, the 
scientists brought into play the spectroscope, and by 
means of that wonderful instrument were able to 
draw from out of the depths of space a number of 
additional elements. 

Agricultural chemistry deals with problems of 
the soil, nutrition of plants and animals, the com- 
position of their products and their value as food. 
It has laid the foundation for the science of agri- 
culture leading to the establishment of agricultural 
stations and schools, in the laboratories of which 
plants and soil are analyzed to determine what ele- 
ments are needed for their fertilization, and many 
valuable discoveries have been made along this line. 
The field covered by this method of analysis has 
not always been strictly chemical. For example, 
the discovery of the fertilizing properties of legu- 
minous plants, clovers, peas and the like, through 
their ability to appropriate to their use free nitrogen 
of the air was discovered by a German chemist and 
bacteriologist, who also discovered the agency of 



68 THE CREATION OF WEALTH 

bacteria in bringing about assimilation of elements 
needful to plant life. 

Medical and physiological chemistry plays an 
important part in the development of general knowl- 
edge of bacteriology and infectious diseases. The 
small organisms which are responsible for the 
various infectious diseases owe their action, in 
great part, to specific chemical poisons which they 
produce. Antitoxins have been discovered by which 
immunity can be secured or a remedy provided. 

As applied to manufactures, chemistry covers an 
extensive field. There is hardly an article in use 
which has not been treated chemically in some stage 
of its manufacture. The discoveries of new com- 
pounds and processes by analytical and synthetic 
methods have, in a great many instances, revolu- 
tionized industrial life. For example, coal tar, 
which v/as at one time discarded as being of little 
worth, has been found to be the source of almost 
an endless variety of compounds of the most anti- 
thetical character. From it has been abstracted the 
most brilliant of colors and the most delicate of 
perfumes; also medicines and antiseptics; gases 
which propel motor vehicles, and the substances 
from which the road over which the vehicle runs, 
are made. A partial list of the compounds derived 
from coal tar include paraffin, naphtha, benzol, creo- 
sote, anthracene, carbolic acid, naphthalene, pitch, 
coal-tar dyes and medicines without number, arti- 
ficial perfumes, and from it asphalt and preservative 
compositions for wood and metal. 

In the industrial world of to-day synthetic indigo 
has displaced the indigo secured from the plant; 



WHO AND HOW? 69 

synthetic camphor, that produced by the camphor- 
tree, and the aniUne dyes of many hues, the old 
madder dyes. Many other commercial products are 
being superseded by better and cheaper ones pro- 
duced in the laboratory of the synthetic chemist. 

Thermo-chemistry treats of thermal phenomena 
accompanying chemical reactions or transformations. 
While these manifestations are caused partly by 
chemical changes proper, they may be due in part 
to purely physical changes that frequently accom- 
pany chemical reactions. Thermo-chemistry has 
accomplished the measurement of heat in various 
chemical transformations, and the principles of 
thermo-dynamics have been successfully applied to 
the consideration of chemical changes. Thermo- 
dynamics is the application of the principles of 
mechanics to heat phenomena. This branch has 
been very useful in calculating heat and power 
forces of solids, liquids and gases as adapted to 
industrial life. 

Metallurgical chemistry is a branch of metal- 
lurgy, which has for its object the preparation of 
metals from their ores. The operations are partly 
mechanical and partly chemical. The processes of 
extraction of metals from ores include smelting, 
amalgamation (with mercury), extraction by aque- 
ous compounds in which metals are dissolved by 
chemical solutions and precipitated, and electrolytic. 
By the latter method a metal is separated from its 
impurities by electrolysis. Notable discoveries 
which have revolutionized industrialism include the 
Bessemer and open-hearth processes of making steel, 
and the electric furnace. 



70 THE CREATION OF WEALTH 

Of the fifteen methods enumerated by which 
mind creates wealth in the economic world, chem- 
istry affects over one-half; namely, the first, third, 
fourth, sixth, seventh, eighth, ninth, tenth and 
eleventh. 

Having found, in a tentative way at least, a 
place on the economic stage for some of the more 
prominent classes of mental workers not directly 
connected with industrial life, we now come to the 
last, and possibly the greatest, class — the govern- 
mental, embracing its three powerful arms, the 
administrative, judicial and legislative. The impor- 
tance of the functions of the inventors, discoverers 
and entrepreneurs demands treatment in separate 
chapters, inasmuch as they are more directly con- 
nected with industrial and commercial processes. 

It is apparent that the principal function of a 
government, whether it be national, state or munici- 
pal, is to enhance economic life or to meliorate its 
environments. But alas! (as is said of the Supreme 
Ruler of the universe) if it has the power to give, 
it has also the power to take away. All are familiar 
with industrial panics and depressions which have 
resulted from the enactment of ill-advised legisla- 
tion. 

Primarily, of course, the function of a govern- 
ment is to protect its citizens and to see that justice 
is done between man and man, individuals and cor- 
porate bodies, corporations and corporations, and 
between one government and another. The protec- 
tion of citizens includes the conserving of health 
and morals as well as the guarding against illegal 
encroachments relating to personal or property 



WHO AND HOW? 71 

rights. Aside from tiie humanitarian point of view, 
it is essential, as a matter of protection, that citizens 
be shielded by law from contamination by immoral 
and unsanitary agencies. 

In order that a government may protect its sub- 
jects it is necessary that it be empowered to enact 
legislation for the collection of revenue to defray 
the legitimate expenses of the commonwealth. This 
is done by direct and indirect taxation. While both 
forms of taxation have an important bearing on 
economic life, the tariff, a form of indirect taxation, 
over which there is unending dispute, plays by far 
the greatest part in the industrial world. The legis- 
lators of a country have a stupendous task set for 
them in the consideration of revenue laws, for it 
is very vital to the interests of a people whether 
such laws are based upon theories of free trade, 
tariff for revenue, or protection. 

But in these days of sharp international compe- 
tition for commercial supremacy the functions of a 
government should not stop at the mere passage of 
laws and their just and equitable enforcement. It is 
essential that foreign commerce be promoted, and, 
in doing so, the officials of a country, both at home 
and abroad, should exert their powers to the accom- 
plishment of three desiderata: the encouragement 
of cordial relations between the home and foreign 
governments; the careful study of the economic 
needs of the countries, in order that a reciprocal 
benefit may accrue ; and to enhance international 
commerce means should be supplied for the rapid 
and economical transportation of the commodities 
to be exchanged. To this end it is expedient that 



72 THE CREATION OF WEALTH 

a merchant marine be established, by governmental 
subvention if necessary. 

The United States, as well as other countries, 
has been slow in recognizing the importance of at 
least two of these methods of promoting commerce; 
namely, the first and the last. For example, there 
has been too much bluster and unsisterly conduct 
from certain quarters towards our sister republics 
of the South. It seems plain, too, that it is just as 
important to secure means of transportation over 
great international highways as between state and 
state. It is futile for our agriculturists and manu- 
facturers to produce goods if there is no way to 
get them to the ultimate consumer. 

It is also questionable if one of the proper func- 
tions of a nation is not found in the promotion and 
fostering of industrial life by scientific investigation 
and research along the lines which Germany has 
initiated. The latter government has promoted 
chemical investigation by opening chemical labora- 
tories for experimentation, until her chemistry 
industry has become the foremost of the world. By 
discovering economical methods of extracting sugar 
from beets, she has developed an industry in that 
line which has displaced, to a considerable extent, the 
cane sugar of the West Indies. While Germany has 
done much towards promoting the manufactures, she 
has not recognized the necessity of fostering indi- 
vidualism, for which England has set the example. 

A prerogative of government which has been 
sometimes overlooked, particularly by municipalities, 
is that of beautifying and rendering more attractive 
cities, as well as rural districts. This nation has 



WHO AND HOW? 7Z 

done excellent work in this direction by setting aside 
scenic sections of the country as national parks. It 
is important, not only from an aesthetic, but also 
from an economic, standpoint, that cities establish 
elaborate systems of parks, connected by boulevards, 
and to see that the public buildings are of pleasing 
architecture and the streets well paved, well kept 
and well lighted. 

The Constitution grants Congress, with the 
approval of the President, the following powers for 
the conserving of peace and the promotion of the 
general welfare: To borrow money on the credit 
of the United States, to raise and support armies, 
to provide and maintain a navy, to grant copyrights 
and patents, to establish post-offices and roads, to 
constitute tribunals inferior to the Supreme Court, 
to provide punishment for counterfeiting, etc., to 
make rules for the government and regulation of 
land and naval forces, to regulate commerce with 
foreign nations and among the several States and 
with Indian tribes, to coin money and regulate the 
value thereof, to establish a uniform naturalization 
law and laws on the subject of bankruptcy, to define 
and punish piracies on the high seas and offenses 
against the laws of nations, to declare war, to lay 
and collect taxes and duties, imports and excises, to 
pay debts and to provide for the common defense 
and general welfare, to provide for the calling forth 
of the militia to execute the laws of the Union, sup- 
press insurrection and repel invasion. 

The greatest constructive forces contained in the 
powers ascribed to Congress are those providing 
for the establishment of post-offices and roads, for 



74 THE CREATION OF WEALTH 

the facilitation of commerce, for the coinmg of 
money, for the collection of taxes and for the pro- 
motion of the general welfare. All of these 
meliorate economic conditions by supplying means 
for interchange of commercial products and mes- 
sages. Roads are being superseded in a degree by 
steam and electric railways, and it is important that 
these should be encouraged and aided, and, at the 
same time, regulated. It is also needful that cur- 
rency, the blood of the nation, should be kept free 
from all forms of impurity and instability and ren- 
dered elastic and mobile. 

The President, in addition to other executive 
duties, has the power, with the aid of the Senate, 
to make treaties with foreign nations. This has a 
very real bearing on economic life in that it affords 
a very effective means for promoting cordial rela- 
tions between nations and for facilitating exchange 
of commercial products. 

The President also appoints the various secre- 
taries of the Cabinet, who assist him in his execu- 
tive duties. The Secretary of the Interior has 
charge of public lands, including mines, superin- 
tends the issuing of patents to inventors, collects 
statistics and facts showing the condition and prog- 
ress of education, and publishes such information 
as may assist in the improvement of education 
throughout the United States. All of these powers, 
economically considered, are very far-reaching. 

The Secretary of Agriculture collects informa- 
tion and makes scientific investigations as to the 
diseases of plants and animals and methods of 
cultivating and increasing the fertility of the soil, 



WHO AND HOW? 75 

etc. It is readily observed that this department 
affects economic life to an incalculable extent, if 
the dissemination of the information at the disposal 
of the bureau is efifectively done. 

The Department of Commerce and Labor pro- 
motes trade and the conditions of the workingman. 
All of this is very essential, but just why industrial 
affairs in general should be overlooked, is not clear. 
Is it not just as needful to promote the manufac- 
tures as agriculture, and is it not reasonable that 
the Government should pick up the skeins of the 
industrial fabric where of necessity the captains of 
industry are compelled to drop them, and help 
weave a more perfect and greater product? Other 
countries do this — notably Germany and Japan — 
and their great industrial expansion can be attrib- 
uted, in a great measure, to this governmental 
nourishing and care. 

It is not necessary to dwell upon the functions 
of the courts and the general police power of a 
nation. It is their duty to adjust difficulties (to 
prevent friction among the parts of the great eco- 
nomic machine). Just as a passing reflection, for 
the benefit of those who may still doubt that a 
government can meliorate economic environments, 
what would be the natural result should the local 
stable government be exchanged for the catch-as- 
catch-can species of rule in Mexico? 

The armies and navies meliorate economic con- 
ditions, first, passively, by exerting and supplement- 
ing great moral pressure for peace and righteous- 
ness, and, second, in defending a country against 
internal and external attacks. 



Id THE CREATION OF WEALTH 

It is not possible to take up and discuss all or 
any part of the various forms of State legislation 
looking to the melioration of economic environments 
and conditions. A large number of laws have been 
enacted by some of the States in an endeavor to 
better industrial conditions, such as sanitation laws, 
with special reference to factories where many 
employees are to be found, minimum wage laws, 
and acts regulating the employment of children and 
hours of labor and the giving of pensions. 

Other functions inherent in a government con- 
sist in the reclamation of waste lands and the con- 
servation of national resources. The promotion of 
public works, as, for example, the Panama canal, 
demands at least a passing mention. As the latter 
engineering feat comes under the head of time- 
saving devices, we have, in summing up, the func- 
tions of a government classed, theoretically or 
essentially, under the entire fifteen heads. 

Other governmental questions, such as Social- 
ism, Single Tax, Physical Valuation and Conserva- 
tion, will be discussed in succeeding chapters. 



VI. 

Inventions and Discoveries. 

The inventors, discoverers and investigators of 
various kinds, who reveal and co-ordinate the forces 
and secrets of nature, have given the wheels of the 
industrial world a tremendous impetus within the 
past century. While there have been great discov- 
eries in all lines of human endeavor, nevertheless 
the nineteenth century will be known above all else 
as the era in which electricity was harnessed and 
developed commercially to a point undreamed of 
by the wildest visionary. The story of Aladdin, 
who, with the aid of a lamp and a kindly genie, 
could hear voices thousands of miles away, and who 
could annihilate time and space, has been paralleled 
in every-day life, and the half has not yet been told. 
Neither will it be forgotten that the century also 
saw the development of the application of steam 
to commercial and industrial life, and, further, that, 
by calling to its aid shell-resisting steel and armor- 
piercing explosives, naval warfare has been revolu- 
tionized. And it must be admitted, speaking 
economically or uneconomically, that this piling of 
Ossa of resistance upon Pelion of attack makes 
business gescheft for the producers of these weap- 
ons of war. 

There are innumerable varieties of inventions 
and discoveries. Some of these can be patented, 

77 



78 THE CREATION OF WEALTH 

but a larger number are not patentable. The patent 
laws of the United States permit any one who has 
invented or discovered a new or useful art, machine, 
manufacture or composition of matter, or any new 
and useful improvement thereof, not known or used 
by others in this country, to protect such inventions 
or discoveries with patent rights. 

It will be seen that patents apply to processes 
and material things, while the term invention or 
discovery, properly speaking, may be applied to new 
and better ways of doing things.* 

The successful business man discovers contin- 
ually many new and better methods of carrying on 
his business, which are economically very valuable, 
but which are not patentable. The abstract forms 
of inventive expression will be treated more 
exhaustively under the head of "Entrepreneurs." 

In a work of this kind it is not practicable to go 
into a thorough study of inventions and discoveries 
or to present a catalogue of even a minor part of 
them. It will suffice to name a few of the most 
important and to determine in what manner they 
affect economic life. It will be conceded, without 
argument, that they influence industrial activities 
in all of the fifteen ways under which a general 
classification of "expression forms" has been made. 

The Scientific American recently published the 
results of an "invention contest" in answer to the 
question: "What are the Ten Greatest Inventions 
of Our Time?" The prize-winner, Mr. William T. 



*A patent may not be obtained for a principle, idea, law of nature, 
natural force or scientific truth. — Federal Statutes — Annotated, Vol. 
v., p. 428. 



INVENTIONS AND DISCOVERIES 79 

Wyman, named the following, with the dates of 
their successful commercial introduction: (1) Elec- 
tric furnace, 1889; (2) steam turbine, 1894; (3) 
gasoline automobile, 1890; (4) moving pictures, 
1893; (5) wireless telegraphy, 1900; (6) aeroplane, 
1906; (7) cyanide process, 1890; (8) linotype 
machine, 1890; (9) induction motor, 1890; (10) 
electric welding, 1889. 

Other contestants named the manufacture of 
acetylene gas from carbide, calculating machines, 
Burbank's discoveries, color photography, concrete 
(reinforced), dictagraph, Diesel engine, dirigible, 
electric car, fixation of nitrogen, flexible photo 
films, high-speed steel, incandescent electric light, 
internal combustion engine, liquid air, mercury 
vapor lamps, monorail, Pasteur's principles, pho- 
nography, photo-engraving, pneumatic tire, radium, 
submarine boats, electrical transmission and trans- 
forming alternating currents. Tungsten lamp, Wels- 
bach burner, wireless telegraphy. X-ray machine. 

The Scientific American also published a de- 
scription of an electric hotel planned for Paris by 
M. Georgia Knap, the inventor of an electric house. 
In this hotel all of the apparatus required for the 
service of the restaurant and bedrooms is arranged 
so conveniently that the operator can promptly sup- 
ply the needs of any guest by pressing a few 
electric buttons. With the electric system, which 
is centralized in the basement, only ten seconds are 
required to carry breakfast or the morning mail up 
to guests on any floor. 

When a guest awakes in the morning, his first 
desire is to know what time it is. Without rising, 
« 



80 THE CREATION OF WEALTH 

he touches a button at his bedside and immediately 
the time appears on a large, luminous dial projected 
on the ceiling. If it is time to begin the new day, 
another button is pressed and a voice, issuing from 
an electric chandelier, asks what is wanted. The 
guest, still lying in bed, calls out, "Open the cur- 
tains and shutters — let in the air; it is too warm. 
Send me a cup of coffee and my letters," etc. These 
orders are promptly obeyed. The curtains and 
shutters open and flood the room with Hght. The 
top of a chiffonier, placed beside the bed, turns and 
extends itself over the bed to form a convenient 
table. The breakfast and letters appear on the 
chiffonier, and, in less than a minute, all of the 
guest's desires are satisfied. 

The restaurant of the hotel is served in the same 
manner. Each small table, for two or four persons, 
is provided with a dictagraph, which is placed in the 
lamp-shade. You touch a button, and a voice from 
the lamp-shade asks what you wish. You give your 
order, without putting your mouth to a telephone. A 
silvered platter in the center of the table sinks and 
presently reappears, laden with the food you ordered. 
As soon as you have helped yourself, the platter 
again sinks, and within twenty seconds returns with 
the dishes ordered by your companion. The plates 
are changed in a very practicable manner by means 
of little dumb-waiters with shelves. By the use of 
these ingenious contrivances one waiter located in 
the basement can quickly serve forty guests. 

Returning to the ten greatest inventions named 
by Mr. Wyman, the prize-winner, we quote his 
analysis of the wonders: 



INVENTIONS AND DISCOVERIES 81 

"The electric furnace, through the generation 
of a heat so intense as to simulate some of the 
primal forces of nature, has produced, for the first 
time, many absolutely or commercially new prod- 
ucts. It can make artificial diamonds and other 
gems ; it is the only means for commercially pro- 
ducing carborundum, the hardest of all manufac- 
tured substances, calcium carbide (the source of a 
valuable illuminant and nitrogenous fertilizer) and 
artificial graphite, which is finding extended use in 
the arts; and it has converted aluminum from a 
merely precious to a very useful metal and reduced 
its price from $12 a pound to less than twenty-five 
cents. It is responsible for all methods of fixing 
nitrogen, which, in view of the approaching ex- 
haustion of the natural supply of Chile nitrate, 
obviates a possible nitrogen famine, and alone 
makes this agency of inestimable service to man- 
kind. 

"The electric furnace is radically transforming 
the steel industry. It produces steel of crucible 
quality with almost open-hearth economy, and, for 
the first time since 1740, the expensive and intricate 
crucible process finds a competitor. In providing 
rails and heavy-service steel of crucible characteris- 
tics in texture and toughness, at slight increase of 
cost over the comparatively impure and unreliable 
older products, a revolution of astounding propor- 
tions is going on before our very eyes. 

"The greatest agency in the service of man is 
the steam-engine. No other device has been so 
studied, improved and super-refined. But its useful- 
ness reached its limits when it failed to satisfy the 



82 THE CREATION OF WEALTH 

enormous greed for power demanded in electrical 
generation and ship propulsion. The steam turbine 
solved the problem, and the reciprocating engine, 
which has borne the brunt of the world's work 
during its century's primacy, has all but been elimi- 
nated in these two vast fields. 

"The turbine has effected striking economies in 
steam consumption, attendance and installation. It 
has abolished pounding and vibration, eliminated 
cumbersome and expensive foundations, reduced the 
space occupied from one to two-thirds, and made 
it advisable and economical to send efficient but 
older types of equipment to the scrap-heap. Six 
million horse-power were employed in turbine- 
driven ships in 1910, and a like amount is used in 
the turbo-generators in this country alone. The 
days of the reciprocating engine are almost num- 
bered — the electric motor is driving it out of the 
factory, and the generation of electricity requires 
turbine installation. Such is the vast extent of the 
revolution now being effected in our basic engineer- 
ing art by the steam turbine, invented by Parsons 
in 1884, but not recognized as a commercially prac- 
ticable proposition until ten years later. 

"The inventions of this period which have 
worked the most rapid alteration in the intimate 
affairs of life are the gasoline automobile and the 
moving picture. The 'auto' in this short space of 
time has developed from a mere experiment to the 
making of one of our largest industries, has caused 
the creation of thousands of miles of improved 
highways, has almost abolished horses in the cities, 
has changed to a marked extent the manner of 



INVENTIONS AND DISCOVERIES 83 

living of an appreciable portion of our people, and 
has directly induced extensive and radical improve- 
ments in, and created, dozens of collateral arts. 

"Superficially the 'auto' appears to be the sum 
of a series of engineering developments in which 
great inspirational achievements were wanting. But 
no fact is plainer than that its introduction was 
neither casual nor fortuitous; the whole history of 
the century's endeavor to provide a practical self- 
propelled car proves that the success of any type 
that at once answered the requirements would be 
immediate. Such success did come with the Daim- 
ler motor, and not before. The distinctive features 
of this motor were lightness and speed, but these 
were precisely the factors that differentiated it from 
its predecessors and that peculiarly adapted this 
engine for its specially designed purpose. 

"The moving picture has transformed the amuse- 
ment of the multitude and promises a future so 
enormous that only its present swift development 
can give faintest indication of. Offering the first 
serious check the theater has suffered since Shake- 
speare's time, its ramifications are becoming more 
varied and extended. As a factor in education, 
science, trade, and in recording current history, it 
has seen its beginning only, and in its application 
to amusement in its higher form we already have 
a promise of a large and brilliant future. The 
kinetoscope of Edison was the first commercial 
appliance to show pictures in natural movement, 
although he owed much to the Eastman film and 
prior investigations. As with the automobile and 
aeroplanes, great credit must be given to French 



84 THE CREATION OF WEALTH 

promoters for first showing its possibility on a large 
scale. 

"Next to the philosopher's stone and perpetual 
motion has man's attempt to fly been the object of 
most persistent pursuit. No other problem in the 
realm of invention has caused such heart-breaking 
discouragement or called for such sacrifice of life. 
In spite of authority, however, the quest of the 
flying machine was not chimerical, although it seems 
but yesterday since success capped the efforts of the 
Wright brothers. Although the aeroplane is radi- 
cally transforming military tactics and as an engine 
of war can not be ignored, it presents the least com- 
mercial utility of all inventions considered. But 
because it is, in many respects, the most radical 
innovation in the whole history of locomotion and 
because the perfection of this device opens up pos- 
sibilities dazzling to contemplate, present utility 
must be ignored in praising this striking accom- 
plishment. It is only necessary to imagine a con- 
dition where frontiers are eliminated, valuable 
rights of way unessential, and fortresses and battle- 
ships impotent, to realize the overwhelming revolu- 
tion which will come with the perfecting of air 
navigation, an outcome by no means beyond the 
limits of possibility." 

Since the above was written, the announcement 
has been made that Orville Wright has invented a 
■"stabilizer," which renders the aeroplane compara- 
tively safe or "fool-proof." 

"If the aeroplane is the most spectacular achieve- 
ment of this age, wireless telegraphy appeals most 
to our imagination and dramatic sense. Its impor- 



INVENTIONS AND DISCOVERIES 85 

tance and significance, however, are in direct pro- 
portion to the hold it has on our interest. The 
scheme of transmitting intelHgence was never com- 
plete so long as ships at sea and remotely situated 
stations could not be communicated with. 'Wire- 
less' supplied this missing hnk and made intercom- 
munication as universal as the world is wide. In 
the short fifteen years since its introduction by 
Marconi, wireless apparatus has become part of the 
equipment of every modern sea-going and naval 
vessel, has been placed in hundreds of government 
establishments and dozens of relatively inaccessible 
stations, has become an important factor in military 
and naval operations, and, most important of all, 
has robbed the sea of its terrors, and saved thou- 
sands of lives through its operations. 

"The cyanide process has been one of the main 
agencies whereby the production of the world's gold 
was trebled between 1890 and 1908. Patented in 
1888 by McArthur and Forest, it was first intro- 
duced on a large scale at Johannesburg in 1890, 
and is now universally established. The process 
has revolutionized the art of metallurgy of the 
precious metals, but its indirect economic and social 
influence has been comparatively greater than its 
direct result in creating wealth, wide and deep as 
has been its application in other directions than gold 
extraction. Gold is the life-blood of trade, and 
whether or not one believes its increased production 
is the cause of the high cost of living, there can be 
no question of the profound effect the quantity of 
gold in circulation has upon commerce and economic 
structure, and, consequently, of the vast significance 



86 THE CREATION OF WEALTH 

of the invention to which such increased production 
is largely due. 

"Ninety per cent, of electric current generated 
is alternating because larger generating units can 
be utilized and the current more easily transmitted. 
The induction motor, constructed by Tesla in 1888, 
and independently suggested in principle by Ferarri, 
was the first satisfactory medium to transform this 
current into power. This epoch-making invention 
is mainly responsible for the present large and 
increasing use of electr"city in the industries. It 
is working a revolution for economy and comfort 
in the mill, factory and workshop. In making the 
motor an individual power unit, it has made power 
arrangement elastic, drawing upon energy only 
when needed and applying it directly only where 
wanted, and has abolished line shafting and belting. 
It conserves thirty to sixty per cent, of energy for- 
merly wasted in uselessly whirling line shafting. It 
saves overhead space and increases productivity by 
making the shop lighter, safer, cleaner and less 
noisy. And so well recognized are these advan- 
tages that establishments in every big industry are 
installing these motors as a measure of economic 
defense. 

"The 'art preservative of all arts,' in the depart- 
ment of composition, remained the same in all its 
fundamental particulars for four centuries after 
Gutenberg first set movable blocks to form a print- 
ing surface. The most intricate devices ever evolved 
and the most ingenious efforts ever expended failed 
to successfully supersede hand composition until 
Mergenthaler's linotype machine established its feas- 



INVENTIONS AND DISCOVERIES 87 

ibility about 1890 and entirely overcame public 
skepticism and inertia a few years later. It is 
enough to say that an operator can set from five to 
ten times faster than the average hand compositor, 
that the type composed always presents a brand-new 
face, that the cost of foundry type and auxiliary 
paraphernalia are dispensed with, and that distri- 
bution of type matter is abolished, to recognize the 
breadth and thoroughly revolutionary character of 
this invention, and to appreciate why every news- 
paper and large prhiting plant in the world has 
installed machine composition. 

"Electric welding in the form in which the art 
first received commercial recognition is the inven- 
tion of Elihu Thompson. The art of the smithy, 
whose annals fade back into prehistoric times, 
underwent its first radical change in its entire 
history with the introduction of this invention 
about a quarter of a century ago. It has not only 
transformed one of the oldest of arts, but is per- 
forming what has never been thought possible in 
this art. This device not only joins previously con- 
sidered 'unweldable' metals, like brass, bronze, cast 
iron, etc., but different and weldably antagonistic 
metals can be united in a solid union. Shapes so 
intricate as to be beyond the capacity of welding 
by any previous device or process, or which could 
only be joined by riveting, are readily united by the 
electric welder. The applicability of the process to 
practically all metals, the dispensing with heavy 
pressures, the surety and swiftness of results, and 
the economy and cleanliness of its working, made 
it a startlingly successful proposition from the very 



88 THE CREATION OF WEALTH 

first, and now its application is as broad as the 
metal-working industry itself. 

"Of all the great achievements of this period, 
these ten have been chosen because they are 
pioneers of the highest order and have been most 
revolutionary in the most potent fields of service to 
mankind." 

We have quoted the Scientific American article 
rather freely, not only because of the admirable 
selections made by Mr. Wyman, but also because of 
his lucid and graphic exposition of the economic 
merits of the ten inventions enumerated. The 
inventions cover a diverse field in their application 
to industrial as well as general pursuits, and before 
proceeding any further an attempt will be made to 
classify them in reference to the fifteen "expression 
forms" or "efficiency methods." 

First, by means of the electric furnace, diamonds 
and other gem substances can be made. This comes 
under the head of efficiency method number 7 
(material-augmenting), as it increases the value of 
products. Second, substances, such as carborundum 
and carbide, open up new projects for exploitation 
(number 1), and save material (number 3) by sub- 
stituting something better and cheaper; and aug- 
ment land (number 8) by means of nitrogenous 
fertilizers; and saves labor (number 2) through the 
manufacture of steel more economically, and again 
augments material by the manufacture of heavy- 
service steel at a slight increase in cost. 

The gas turbine saves material (number 3) by 
eliminating expensive foundations; and augments 
material (number 7) by reducing the space occu- 



INVENTIONS AND DISCOVERIES 89 

pied; and eradicates deleterious influences in mate- 
rial (number 11) by abolishing poundings and 
vibrations. In doing away with these distracting 
noises it would naturally also remove deleterious 
influences in labor (number 9). 

The gasoline automobile creates a new enterprise 
(number 1), saves labor (number 2), saves time 
(number 5), and otherwise facilitates intercommuni- 
cation by promoting good roads. 

The moving picture creates a new field of indus- 
try (number 1), and may enhance any of the 
efficiency methods by educational films. For exam- 
ple, it may promote efficiency in the laborer (num- 
ber 6), and eradicate deleterious influences in the 
laborer (number 9) through the exhibition of edu- 
cational and entertaining films. Nearly all recog- 
nized efficiency methods, including the elimination 
of useless motions, are now being studied by means 
of the moving picture. 

The aeroplane opens up a new economic world 
(number 1), saves material (number 3), it needs 
no tracks, saves time (number 5), and may melio- 
rate economic environments if, through its per- 
fection, war is made practically impossible. 

The wireless telegraph creates a new field (num- 
ber 1) — intercommunication between moving trains, 
vessels, etc. Its greatest triumph lies in its power 
to save life on the great ocean greyhounds. It 
saves labor (number 2), saves material (number 
3), saves time (number 5), eradicates deleterious 
influences in the laborer (number 9) by "robbing 
the sea of its terrors," as in the "Titanic" and 
"Volturno" disasters. 



90 THE CREATION OF WEALTH 

The cyanide process augments materials (num- 
ber 7) by increasing the output of the precious 
metals, and meliorates (or contrariwise) economic 
environments by increasing the "life-blood" of trade 
— ^money in the shape of gold. 

The induction motor, by concentrating power, 
saves labor (number 2) ; saves material (number 
3) ; saves time (number 5) ; augments material 
(number 7) by economizing space, and removes 
deleterious influences in the laborer (number 9) by 
"making the shop lighter, safer, cleaner and less 
noisy." 

The linotype machine saves labor (number 2), 
saves material (number 3), by eliminating foundry 
type, etc., and indirectly created a new industry 
(number 1) by the impetus it gave to the publish- 
ing business. 

Electric welding creates new industries (number 
1) by performing what has never before been pos- 
sible : welds "unweldable" materials and also permits 
welding in previously impossible ways and condi- 
tions; saves labor (number 2), and saves material 
(number 3) by substituting something better, and 
augments material (number 7) by bringing into 
use in new ways heretofore "antagonistic" metals. 

Reference has been made to the steam-engine, 
and it may be disposed of now in connection with 
its general application to industrialism and com- 
merce. No one will question that it has opened up 
new fields (number 1), and what fields, farms, 
plantations, prairies, forests, mines, factories and 
scenic beauties! Neither will it be questioned that 
it saves labor (number 2), saves material (number 



INVENTIONS AND DISCOVERIES 91 

3), saves time (number 5), and, in a way, melio- 
rates economic environments (number 15) by facili- 
tating the exchange of products and commerce gen- 
erally. 

Naturally, next comes the telegraph, the steam- 
engine's great business partner. This also opens 
up new economic fields (number 1), saves labor 
(number 2), saves material (number 3), saves time 
(number 5), and indirectly meliorates economic 
environments through the rapid dissemination of 
news, and in supplementing the postal service. For 
all practical purposes the telephone may be classed 
with the telegraph. 

All agricultural machines and devices, such as 
planting and harvesting machines, threshers, cotton- 
gins, etc., may be grouped together. They create 
new economic fields of labor (number 1), save labor 
(number 2), save time (number 5), augment land, 
in some instances (number 8), by permitting more 
efficient culture; and a number of them, such as 
weeders, sprayers and similar devices, eradicate del- 
eterious influences in land and land products (num- 
ber 10). All of these inventions are effective in 
stimulating agriculture. 

"A machine has recently been perfected," says 
the Outlook, "which may do more for human liber- 
ation than the laws of many states or the benefac- 
tions of many philanthropists. This is the mechan- 
ical cotton-picker. The possibilities which lie latent 
in this bit of machinery are more credible when it 
is remembered a social revolution was produced by 
another cotton machine, Eli Whitney's cotton-gin. 
It is said of the earlier invention that it created the 



92 THE CREATION OF WEALTH 

slave power; of the latter invention, that it will 
wipe away the worst vestiges of slavery. It is the 
invention of a Scotsman, August Campbell, who 
has worked twenty years upon the idea. The 
machine he has constructed will discriminate be- 
tween ripe and unripe cotton, between leaves and 
cotton bolls, and will injure neither the cotton nor 
the plant. By means of it one man can do the 
work of fifty pickers. 

"What this machine can achieve for economy 
alone is astonishing. It is estimated that it will 
save in the cost of picking cotton annually 
$180,000,000. This is, however, only a small part 
of the benefit it is capable of bestowing upon the 
country. The great part of that benefit will consist 
of making conditions of labor in the cotton region 
more humane and normal. At present King Cotton 
is a tyrant and exercises, his tyranny at cotton- 
picking time. The cotton that one man can culti- 
vate requires ten persons to pick, and the longer 
the ripe cotton is unpicked the more danger it runs 
from the wind and rain. So there is a sudden 
frenzied, and then subsiding, demand for labor. 
Children are pressed into service under the hot sun 
and sometimes beaten for rebelling against the hard 
task, and the negroes are charged with vagrancy 
so that the chain-gangs will be replenished for the 
use of the cotton planters." 

The evolution of methods of lighting presents a 
marvelous record. The primitive torches were 
after a long time superseded by whale oil burnt in 
open vessels. This was followed some time later 
by the tallow candle, which in turn was supplanted 



INVENTIONS AND DISCOVERIES 93 

by the kerosene lamp. Later came the illuminating 
gas, and this, in turn, is gradually being crowded 
to the wall by systems of electric lighting. Each 
of these new methods created new economic fields 
(number 1), saved material (number 3), and pro- 
vided a better article (number 14). The Welsbach 
and similar burners for gas, and the Tungsten and 
kindred devices for electric lights, come under the 
efficiency head of number 7 (material-augmenting) 
— increase the power of light. Incidentally, this 
increasing of the power of light removes deleterious 
influences in the laborer, by making his work less 
difficult. 

While the inventor, under a strict classification, 
is not a pure exponent of ideaistic wealth, he, never- 
theless, holds a prominent position in the production 
of dynamic wealth. In some instances he not only 
invents an article, but a machine for its manu- 
facture. The ordinary pin presents an example of 
this kind. If we class wire as raw material, the 
pins are practically made independently of manual 
labor, being turned out and inserted in paper pack- 
ages ready for sale by machinery. 

There is a device for manufacturing screws 
which exhibits almost human intelligence. The 
machine seizes a rod of metal, pulls it rapidly along, 
gives the end of it the shape of a screw-head, cuts 
the thread around it and then delivers the perfect 
screw. When the machine has used up the rod of 
metal, it rings a bell for the attendant to bring 
more. 

The Diesel engine, invented by Dr. Rudolph 
Diesel, is an engine which is driven by oil by means 



94 THE CREATION OF WEALTH 

of internal combustion, and is destined to supersede 
all forms of coal engines. Instead of using coal 
direct, the "black diamond" will be converted into 
gas and tar oil, the former for heating and lighting, 
the latter for driving engines. The tar oil will pro- 
duce from three to five times as much power in the 
Diesel engine as the coal, from which the tar is 
generated, would if fed into a furnace. The 
inventor claims that, though all coal be exhausted, 
the earthnut, which can be cultivated to an illimit- 
able extent in the tropics, will furnish an inexhaust- 
ible supply of oil. 

This machine represents the creative principle 
(number 1), labor-saving (number 2), material- 
saving (number 3), time-saving (number 5), and 
material-augmenting (number 8), increases the 
power capacity of coal and other combustibles. 

The electric fixation of nitrogen is a term 
applied to the process, recently discovered, whereby 
the nitrogen of the air may be utilized for the 
fertilization of plants. This is done by passing an 
electric current through air, resulting in the for- 
mation of oxide of nitrogen or nitric acid, from 
which fertilizers are made. This comes under 
efficiency method number 8 (land-augmenting). 

High-speed steel is made by tempering "Tung- 
sten" steel, from which tools are made that will cut 
at red heat. This has increased the cutting capacity 
of tools more than 100 per cent. The economic 
features of this invention may be classed under 
labor-saving devices (number 2), material-augment- 
ing devices (number 8), and the manufacture of a 
better article (number 14). 



INVENTIONS AND DISCOVERIES 95 

The preservation of sugar-producing plants is a 
process by which beets and sugar can be preserved 
for a long time, thereby eliminating a great loss 
previously sustained in cases where the plants are 
not promptly refined. The beets, etc., are reduced 
to a dry powder and then shipped to a refinery in 
this form. This process eradicates deleterious influ- 
ences. 

"It is the use of machinery that is making the 
culture of rice in this country the wonder of the 
world. A comparison of the number of days' work 
required to produce an acre of rice in the regions 
where it has been cultivated for untold centuries, 
and in the United States, where the industry has 
only recently been entered upon, is both interesting 
and instructive. In Bengal it requires the labor of 
one man eighty days, and the use of a yoke of oxen 
twenty days, to produce an acre of rice; in Japan, 
without the aid of any animal, 120 days; in the 
Philippine Islands, practically the same as India; 
but in the rice-growing regions of Louisiana and 
Texas, with the aid of machinery, the maximum 
of expended time of human effort on one acre of 
rice is two days and the use of a team for a day 
and a half." — "The New Agriculttire" (Collins), pp. 
307 and 308. 

The writer affirms that the corresponding 
amounts of production are: In India, 1,000 pounds; 
in the Philippines, 900 pounds ; in Japan, 3,000 
pounds ; in Louisiana and Texas, 64,800 pounds. 
He adds, "What American machinery is doing in 
the production of rice is not unique, but typical." 

The discovery of antitoxins, antiseptics and 



96 THE CREATION OF WEALTH 

Other preventatives and cures by scientists, led by 
the great Pasteur, has been of incalculable benefit 
to industrial life. A most striking example is the 
solving of the yellow-fever problem, which has 
resulted in the saving of millions of dollars in 
Southern commerce. How the mosquito origin of 
this disease was discovered, and how this knowledge 
was put to practical use, is well known. The 
expression- forms of all of these marvels of scien- 
tific research are number 9 (eradication of dele- 
terious influences in laborers) and number 15 
(melioration of economic environments), by remov- 
ing the incubus of epidemic scares. 

Thus far we have cited examples of methods of 
increasing productivity under all of the fifteen 
heads, with the exception of number 13 (advertis- 
ing, or the promotion of business). It will not be 
difficult for the reader to recall instances, striking 
and spectacular, wherein the ingenuity of man has 
aided and abetted the butcher, the baker and an 
endless number and variety of "makers" in adver- 
tising his wares. The streets in all of our large 
cities are aflame with revolving, blinking and whirl- 
ing electric signs, startling, staggering and stupen- 
dously sufficient and efficient. 

And, speaking of advertising, what better 
vehicle presents itself to the man who has some- 
thing to sell than the average daily paper or popular 
magazine? It is not a case of running or walking 
and reading, as in electric signs, but of riding and 
reading while seated quietly in the surface, elevated 
or subway trains, or at your home. And the mer- 
chant who most assiduously, persistently and attract- 



INVENTIONS AND DISCOVERIES 97 

ively places his wares before the public is the one 
who garners the reward of his expenditures and 
labors. 

It is needless to state that the printed word 
affects, directly or indirectly, all of the fifteen ways 
of increasing economic productivity. If the in- 
ventors and discoverers named deserve the eulogies 
awarded, what sort of praise can be given the 
inventor of the art of printing? Without empha- 
sizing the manifold avenues for labor opened by the 
art, let us view the benefits derived therefrom from 
the intellectual and moral angles. If, as the old 
debating societies were wont to decide, the pen is 
mightier than the sword, what can be said of the 
printed word? It reaches millions, and has the 
power to please or oppress, to elevate or bow down, 
to inspire or enthrall, and it incites war and is 
potent for peace ; it inspires hate, and is eloquent 
in abetting love; and through the co-operation of 
the telegraph, wireless and cable, lays the news of 
the world at our feet. 

The inventor of printing, of course, is not 
responsible for all this. His device has made it 
possible for brain workers of all times to reach the 
masses with greater facility. All creeds, beliefs and 
propagandas find means of vent through this "art 
preservative." 

This art presents an excellent illustration of how 
the invention or discovery of some new process or 
device assists, and makes possible, the development 
of other arts. What chance would the publisher 
of one of the great metropolitan dailies have of 
issuing his enormous "blankets," if it were not for 



98 THE CREATION OF WEALTH 

the existence of scores of other wonderful products 
of the brain of man? Some of these are the steam 
or electric engine to provide power for the plant 
and to transport finished and unfinished products, 
the telegraph, the telephone, cable, etc., to carry 
the news, the linotype to set up the news (not for- 
getting the advertisements), photogravure, the 
process of electro-plating to render rapid printing 
practicable, and the marvelous rotary press which 
reels off about 100,000 sixteen-page papers per 
hour. These presses require from 100 to 200 
horse-power engines and consume about seventy-five 
miles (roll width) of paper per hour, or 300 miles 
the width of the newspaper, which is delivered by 
the machine folded to half -page size, pasted and 
counted. 

The mechanical ingenuity of the American 
(there being on file in the Patent Office at Wash- 
ington over one million patents*) is responsible for 
one of the paradoxes of industrial life. By the 
adoption and introduction into their plants of cost- 
saving machinery the manufacturers are able to pay 
the highest wages to their employees and at the 
same time to undersell their foreign competitors. 
No manufacturers in the world are so ready to 
accept new labor-saving inventions as are those of 
the United States, and none so readily send costly 
machinery to the scrap-heap in case a better 
machine is discovered for the economic production 
of a manufactured article. 

The inventor is gradually emancipating man 



*This is almost three times as many patents as have been granted 
in any other country. 



INVENTIONS AND DISCOVERIES 99 

from the drudgery and grind of irksome labor. 
Labor-saving machinery is replacing man in many 
occupations and pursuits whose labor is of a 
mechanical and muscle and mind racking nature. 
But, some one will object, what is to become of the 
laborer thus supplanted? The answer is that still 
newer inventions open wider fields for labor, and 
it becomes the duty of the individual to adjust him- 
self to the new conditions. Later it will be shown 
how mental supersedes manual labor. 

Until the beginning of the nineteenth century, 
labor-saving machines were looked upon as the 
enemy of the workingman. England forbade emi- 
grants carrying tools to other countries. What was 
the result? Necessity compelled and incited genius 
to spring into new life, with the result that Amer- 
ican goods compete successfully with the world. 

A new era has dawned, and from all these inven- 
tions have come larger incomes, shorter hours of 
labor and a greater degree of comfort and health, 
so that in this, the twentieth century, the inventor 
is ranked as a benefactor whom the world delights 
to honor. 



VII. 

The Entrepreneur. 

Entrepreneur is the French word for "under- 
taker" — not the undertaker or funeral director of 
America, although the latter comes under the classi- 
fication, for if he undertakes to bury a person 
(dead) he is usually successful in the undertaking. 
The word applies, in economics, to the employer of 
labor who undertakes to accomplish something in a 
business, industrial or commercial way — the "co-or- 
dinator" of the orthodox economists, and the "enter- 
priser" of Hawley and other advanced economists. 
Some economists limit the term to managers of 
large enterprises. 

It is true that the entrepreneur is a co-ordinator 
of the factors of production (land, labor and capi- 
tal), but does he not do more than bring them 
together? Do the inventors and other classes of 
intellectual workers possess all inventiveness ; have 
they a corner on imagination and inspiration? Does 
the creative faculty in man stop short with the man 
who invents a machine, composes an epic or pro- 
duces a grand opera? 

To invent means to find out or to produce by 
mental activity, to create, produce or construct by 
original thought or ingenuity, to originate (a new 
method of action, kind of instrument, etc.). The 
definition of inventive as given by the Standard 

100 



THE ENTREPRENEUR 101 

Dictionary is, "Able to invent ; quick at contrivance ; 
ready at expedients." If an entrepreneur, therefore, 
produces by mental activity, or if he devises a new 
method, better and shorter, of performing a certain 
kind of work, he is an inventor. 

One of the principal functions of the entrepre- 
neur is the adaptation of the various economic 
instruments to the accomplishment of a specified 
end. The salient distinguishing- feature between the 
inventor and the entrepreneur is that the former 
expresses his creations in a concrete and patentable 
form, while the latter confines his creative energies 
principally to the operation of a plant or the con- 
duct of a large enterprise. 

As has previously been stated, one of the most 
perplexing questions with which the economists 
struggle is that of the exact function of the entre- 
preneur. Hawley, who is the promulgator of the 
"Risk theory of profit," says, in its defense : "And 
as no one, as a matter of business, subjects himself 
to a risk for what he believes the actuarial value 
of the risk amounts to — in the calculation of which 
he is on the average correct — a net income accrues 
to enterprise, as a whole, equal to the difference 
between the gains derived from undertakings and 
the actual loss incurred in them. This net income, 
being manifestly an unpredetermined residue, must 
be a profit, and, as there can not be two unprede- 
termined residues in the same undertaking, profit is 
identified with the reward for an assumption of 
responsibility, especially, though not exclusively, that 
involved in ownership." 

Hawley advances this theory in opposition to the 



102 THE CREATION OF WEALTH 

orthodox theory that an entrepreneur is entitled to 
profit as remuneration for his services rendered as 
a director or co-ordinator of the factors of produc- 
tion. It will readily be seen that neither school of 
economists explains the economic nature of the 
function of the man of business. The one says he 
is entitled to a profit because he assumes a risk, 
while the other contends that the mere co-ordina- 
tion of productive factors is the sole function of the 
man of enterprise, and for which he reaps a profit. 
The admission that both are right as far as they 
go throws but very little light on the subject under 
discussion. It must be conceded that one who 
assumes a risk is entitled to a wide margin for 
profit, as a safeguard against loss, and it is also 
plain that he is a co-ordinator. This, however, is 
giving a thing a name without defining it. 

An effort will be made to determine the nature 
of the productive force, or forces, embodied in the 
entrepreneur. The fact seems to be that he has a 
complex power exerted in numberless ways. In 
analyzing his productive qualities, it must be borne 
in mind that there are many classes of entrepre- 
neurs, the term covering all those who engage in 
enterprises of a productive nature (including, of 
course, the agriculturists), and naturally his activi- 
ties embrace all of the fifteen methods of facilita- 
ting production. 

Primarily, the function of the entrepreneur is to 
discover the wealth of a country in order to the 
development of its resources in the general effort 
to satisfy the desires of man. The magnitude of 
the function of the entrepreneur can be realized 



THE ENTREPRENEUR 103 

when it is understood that he not only must super- 
vise the manufacture and marketing of products, 
but must also exercise his mental powers in the 
selection of subordinates, and in training them to 
do their work expeditiously and efficiently. That 
is, he must study both men and things, and must 
utilize the ideas of the men under him in the con- 
duct of his enterprise so as to secure the best eco- 
nomic results. 

The resources of a nation, as has before been 
stated, consist not only of the so-called economic 
wealth, products of land, mines and manufactures, 
but also national wealth. The latter kind of wealth 
has not been classed as such by economists, but it 
will be proven that, as in the case of the apple that 
was allowed to rot, the inherent wealth of natural 
scenery and the like can be transmuted into poten- 
tial wealth by the interjection of mental and phys- 
ical labor. 

But, it will be objected, natural scenery can be 
given no exchange value. Let us see if this can 
not be done. The entrepreneur constructs a rail- 
road into a region of scenic beauty and grandeur, 
and its attractive power proves so great that divi- 
dends far in excess of the basic six per cent, can 
be paid on the stock. It is plain that the enhanced 
value of the road is due, first, to the natural attrac- 
tions, and, second, to the enterprise of the promoter, 
who rendered the beauties accessible. As the 
exchange value of a thing is governed by its pro- 
ductiveness, and as the latter in this case was due 
in great part to scenery, the latter has become 
capitalized. 



104 THE CREATION . OF WEALTH 

But to return to the undertakers. There have 
been instances recorded where the supposed corpse 
has "come to Hfe," thereby causing great scandal 
and interfering with the well-ordered arrangements 
of the funeral, as no self-respecting corpse should 
do. But who shall say, even in cases of this kind, 
that the funeral was altogether a failure? It is the 
law of the commercial, as well as the moral and 
social, order, that out of the labor and travail, the 
ashes and the dead hopes of others, springs new life 
of beauty and power. 

This simile may be somewhat bizarre and in bad 
taste, yet it strikingly illustrates the point it is 
desired to make. Do we not all recall instances 
innumerable wherein the labors and hopes of others 
have seemingly gone for naught, yet, in reality, 
from the failures and mistakes of these persons 
there have been reaped bounteous harvests? In 
other instances the mistakes of others have proven 
to be the warning bells of the buoys on the great 
sea of commerce. If the undertaker had not struck 
a rock in- the road and wrecked the hearse, the 
corpse would still be a corpus inanimum. 

Now abideth creativeness, labor-saving, time- 
saving, cost-saving and profit-increasing devices and 
efficiency methods of fifteen varieties, but the great- 
est of these is creativeness. 

There are still, no doubt, unbelieving ones who 
keep revolving in their minds the question, "What 
is this commercial creativeness?" "Creativeness" is 
greater than all the other fourteen efficiency meth- 
ods, because it is the life-principle of all, and more. 
It is easy to see the merits of a thing after it is 



THE ENTREPRENEUR 105 

accomplished; but to have the vision of a new 
project, and the courage to bring it to pass — that 
is the real thing. This is the "initiative" we read 
so much about, and which is so little understood. 
While the so-called "efficiency experts" are putter- 
ing around, eliminating a useless motion here and 
speeding up a machine there, the creative man is 
eternally grasping after new fields to conquer, new 
markets for his products at home and abroad, is 
continually evolving new methods of promotion 
(advertising, etc.), and better systems of produc- 
tion and distribution. 

But what if he should fail — if his dreams and 
endeavors should become as ashes in his hands? 
It is better to have tried and lost than to have never 
tried at all. It was this creative spirit — of vision 
and courage — which inspired Columbus to "sail on 
and on and on," as Joaquin Miller has so graph- 
ically portrayed in his deathless poem, and that led 
to the discovery of a continent. What if he had 
turned back when his sailors mutinied, and when 
the very stars seemed to have departed from the 
sky? And Columbus seems to have imparted to all 
Americans his glorious qualities. 

It was this spirit that impelled the early pioneers 
to explore and conquer a hostile continent ; this was 
the spirit that fired the makers of the Declaration 
of Independence and freed a continent from tyran- 
nous rule ; it was this spirit that led the founders 
of the republic to establish the freest form of 
democracy on earth, and to defend it against stu- 
pendous odds ; it was this spirit that spurred the 
"pathfinders" to trail a way across deserts and 



106 THE CREATION OF WEALTH 

mountains to the golden Pacific; and it was and is 
this spirit that led and is leading the captains of 
industry to dot the country with factories, to 
encircle it with wires and embrace it with ribs of 
steel. 

All of this was done at the cost of many lives 
and the loss of millions in money and property. 
"What waste of men and resources !" the pessimist 
and chronic croaker cry. But in what other way 
could a continent be subdued? That man is not 
worth considering who sees something which ought 
to be done, but counts the cost before undertaking it. 

Much is being written in these troublous times 
about the great "waste" resulting from inefficiency. 
There lies before us a lugubrious volume entitled 
"The Price of Inefficiency," and the waste which 
the author charges against the Government and 
people presents a dazzling study in millions. The 
author says we waste $50,000,000 and sacrifice fifty 
lives each year in forest fires ; we waste a billion 
cubic feet of gas daily; we waste $22,000,000 a 
year in manufacture of coke in lost gases ; we waste 
$238,000,000 in losses in floods and freshets; we 
waste $500,000,000 a year in soil erosion; we waste 
$659,000,000 a year through losses to growing 
crops, by noxious insects and careless methods of 
agriculture; we waste $772,000,000 annually in 
losses to incomes due to industrial diseases; we 
waste $1,500,000,000 through the loss of life and 
illness to industrial workers through preventable 
diseases, accidents, and — ^but we will not inflict more 
on the reader. 

The papers have recently reported an unprece- 



THE ENTREPRENEUR 107 

dented snowstorm and blizzard throughout the 
Middle States, causing the destruction of many lives 
and millions in property, and effectually blockading 
traffic and communication. How is all this waste 
to be avoided? Does it not seem that waste is a 
necessary concomitant of all growth and progress? 
It would appear so, and that the industrial atmos- 
phere, as in nature, must be revived and reoxygen- 
ized occasionally. 

A. W. Shaw, editor of System, the business 
man's Bible, writes : "Every day a part of you dies. 
But as your wornout tissues fall away new ones 
replace them. Therefore, you continue to live. 
When change ceases, life stops. And business, like 
your body, is made up of parts which must con- 
tinually change and be renewed. What makes little 
business swiftly colossal — covers their grounds 
almost overnight with great buildings — feeds their 
many furnaces with huge quantities of raw mate- 
rials — swells their profit as if by magic? There is 
only one answer. Other firms may duplicate Mar- 
shall Field's stock and goods, enlist ten times the 
Edison company's capital, start a dozen stores where 
H. B. Claflin has one, yet fail to make any inroads 
on their trade. Their strength lies not in buildings, 
goods, capital ; but in tremendous aggregations of 
right methods. 

"In this they are typical of a thousand other 
great houses. Every day in each of them some 
method dies — is outworn, scrapped and replaced ; 
obstacles arise, but fresh plans are continually 
brought forward to blow them out of existence. 
Old ideas, processes, invented devices, constantly 



108 THE CREATION OF WEALTH 

give way to new things that better accomplish their 
functions. Buildings are torn down, machinery torn 
out; designs, materials, products are altered. Every- 
thing in these unbeatable businesses changes except 
one thing — the principle of discarding dying tissue 
the moment it begins to die, the practice of replac- 
ing accepted methods the instant better ones are dis- 
covered." 

So it seems to be a lavv^ of universal application 
that waste precedes and accompanies growth. Who 
knows but that these great national calamities form 
a part of a general scheme for the betterment of 
the human race? The supreme lesson to be gath- 
ered is, that all of us are expected to do our best — 
to try, and to keep on trying until our purpose is 
accomplished or forever defeated. 

"Visionaries," "lunatics," and other choice and 
complimentary epithets, were applied to Cyrus W. 
Field and his confreres in their "wild" attempt to 
lay a cable across the sea. Similar terms, accom- 
panied by ridicule, met Robert Fulton and those 
who followed him in developing transoceanic steam 
travel, and to the first builders of railroads and tele- 
graphs. 

Henry Ward Beecher, in an address at a banquet 
to Cyrus W. Field, following the successful laying 
of the Atlantic cable, said: "I scarce dare any 
longer think what shall be. I remember the deri- 
sion with which Whitney's plan for a railroad to the 
Mississippi was held. I remember there was scarce 
a paper in the country that did not feel called upon 
to talk of the advisability of sending him to the 
lunatic asylum. I remember when the project of a 



THE ENTREPRENEUR 109 

Steamer crossing the Atlantic was declared scien- 
tifically impracticable." 

It would appear that these "visionaries" are not 
so visionary after all. They must be more than 
dreamers — they must see something that others of 
duller imagination can not see. What distinguishes 
between the creative visionary and the visionary as 
generally conceived — between the visionary builder 
and the visionary dreamer? It is the practical ele- 
ment.' He must combine his imaginative qualities 
''with the matter of fact. Columbus had more than 
a vision ; he was convinced from his readings and 
researches that the earth was round, and that by 
sailing westwardly he could reach India. He did 
not expect to discover a continent. He probably 
would have been satisfied with an island or two. 
But it appears to be a law universal that the man 
with the firm convictions and courage is rewarded 
beyond his wildest hopes. 

The entrepreneur must not only have a vision ; 
he must have knowledge and wide information, and 
he must be able to convince hard-headed capitalists 
of the practicability of his vision. For, that which 
in an invention makes it worth thousands, in busi- 
ness may cause it to be worth millions, in terms of 
which the captains of industry must think. What 
is the thing — the active and acting germ — in an 
invention that renders it patentable, and in a busi- 
ness that renders it marketable? Evidently the idea 
or vision. But in promoting an enterprise there 
must be visions upon visions and acts upon acts. 

At the outset the entrepreneur must combine 
the imaginative and the mathematical mentality — a 



no THE CREATION OF WEALTH 

rare combination. The railroad builder, for exam- 
ple, must not only possess the prophetic power to 
discover the prospective value or economic attract- 
iveness of the wealth, or resources — agrarian, min- 
eral or scenic, and, later, dynamic — along a pro- 
jected line, but he must have the mathematical or 
business ability to compute its cost and finance its 
construction, and, later on, its extension. This 
includes methods and means of securing the neces- 
sary funds for the conduct of the enterprise with 
the least cost, and the issuance of bonds for exten- 
sions and improvements. 

Having secured the necessary funds, the pro- 
moter begins to organize forces in the construction of 
the road into the heart of the region to be exploited, 
and, mayhap, by tremendous engineering feats, to the 
very summit of the highest range of mountains. 

In the construction of the railway the entre- 
preneur must utilize the knowledge or brain power 
of numerous engineers and mechanics, as well as 
the manual labor needful for carrying out his plans. 
No small part of the work lies in selecting compe- 
tent men to see that the plans are economically 
prosecuted. Stated generally, the entrepreneur him- 
self contributes toward the construction of the road 
by many valuable suggestions, both in planning the 
route and building the railroad. In the one, he 
shows how the route can be shortened, perhaps, by 
tunneling through a mountain or by spanning a 
lake, even though it entails a greater initial cost, 
realizing that it will ultimately prove an economic 
benefit in the way of decreased cost in transporta- 
tion and maintenance and in increased travel. 



THE ENTREPRENEUR 111 

Having completed the road, the entrepreneur 
must bring into play powers of organization and 
administration in the tremendous task of operation. 
The same care must be exercised here as in the 
construction of the road, both in the selection of 
the employees and in the adoption of modern meth- 
ods and appliances for facilitating operation. He 
must have great administrative ability and his 
various mental capacities are taxed to the limit. 

We now come to the most important operative 
factor in the production of wealth — the magic wand 
which conjures forth the hidden gold. We refer, 
of course, to advertising, which includes the judi- 
cious use of printers' ink as well as personal repre- 
sentation. It is plain the active principle of this 
factor is gray matter. After the railroad has been 
built, the schedule made up and the various depart- 
ments organized, the great and vital proposition of 
securing the business remains. This is accom- 
plished in three general ways — ^by sending out 
personal representatives, by correspondence and by 
advertising. The representatives or agents are 
really a part of the entrepreneur machine. The 
men are selected by the promoter and instructed in 
their work. The other two methods may be dealt 
with collectively, as the only manner in which they 
differ is in the selection of means. In correspond- 
ence, the business is advertised through letters or 
telegraphic or telephonic communications, which 
general mediums of circulation are utilized in what 
is commonly known as advertising. 

The advertiser must exercise three important 
functions in securing the desired ends; namely, 



112 THE CREATION OF WEALTH 

those of choosing the most saHent points for adver- 
tisement, the preparation of the advertising matter, 
and the selection of the mediums which will reach 
the sort, and largest number, of people who may 
be attracted by what he has to offer. All of these 
functions require great foresight, severe mental 
training and concentration and persistent endeavor. 
In short, the success of the enterprise depends 
largely upon the proper and conspicuous placing of 
its advantages before the public. There is practi- 
cally no limit to the economic value that may be 
attracted in this manner. 

To all other qualities the entrepreneur must add 
executive force, and in the conduct of a business 
must decide quickly and rightly upon thousands of 
situations that occur almost daily. In a word, the 
economic value of the idea is interwoven throughout 
his commercial dealings, and it would be futile to 
try to enumerate a fractional part of the examples 
of creative wealth which obtain in the prosecution 
of a great business enterprise. 

Brains are the real miracle-worker. By the 
application of gray matter the three factors of pro- 
duction under the old school are modified, reduced, 
increased and in some instances practically done 
away with. The introduction of ideas results in the 
elimination of labor to a degree, and, by permitting 
the adoption of more efficient methods, reduces the 
amount of capital required in various industries in 
numberless ways, and, in the case of land, makes 
two blades of grass grow where one grew before. 

One of the most potent recent developments in 
industrial life is the introduction of specialists into 



THE ENTREPRENEUR 113 

all phases of business. Experts are employed at 
high salaries in order that economies may be 
effected in the daily routine of business. The 
specialists include not only the highly skilled in the 
various trades and occupations, but also those who 
have made a study of the new phases of commer- 
cialism as it becomes more highly organized wi 
the lapse of time. For instance, there are thoL 
who have become proficient in arranging office 
equipment for large corporations and firms in order 
that the daily work may be carried on with the 
minimum of exertion and cost. 

If the reader is not yet convinced of the eco- 
nomic value of the idea, let us try it on the farmer. 
We have, in previous chapters, made casual refer- 
ence to farming, but as he also comes under the 
head of entrepreneurs we will elaborate. 

"Surely, dead soil," says the conservative, "can 
not be made to produce beyond its natural strength." 
Let us see: Given two farms side by side, with the 
same quality of soil, receiving like amounts of rain 
and sunshine. "The products will be equal," says 
the conservative, but the twentieth-century farmer 
knows how fallacious is this reasoning. 

One of the farmers plants his crops seasonably 
and tills the soil assiduously, but uses no artificial 
means to enhance its productivity. The other uses 
all modern methods needful and applicable, such as 
the selection of plants and animals adapted to the 
soil, rotation of crops, intelligent fertilization, deep 
plowing, dry farming, irrigation, the introduction of 
bacteria which are known to be necessary for the 
growth of some plants, the use of insecticides, such 



114 THE CREATION OF WEALTH 

as paris green or the famous Bordeaux mixture, 
which saved the grape industry of France, and 
scores of other expedients which can not be enu- 
merated. 

The revenue derived from the latter farm is 
several times greater than from the first named, 
^hat caused the increase but the application of 
rains, as it were, to the soil? Now, the Socialists, 
SyndicaHsts, Industrial Workers of the World, and 
their ilk, say that labor produces all the wealth, 
therefore the farmer who was efficient must divide 
with the neighbor who was too slothful to think 
and to act. 

Even such an unintellectual pursuit as bricklay- 
ing has been revolutionized recently by efficiency 
methods. The quantity of work done by a single 
laborer has been trebled by the introduction of 
machinery which carries the brick to a position level 
with, and within easy reach of, the workman, who 
lays the brick without being compelled to use the 
time and energy consuming stooping motions inci- 
dent to the customary methods of the trade. 

Rufus Gilmore, writing in System, says: "Good- 
will is the mystery of modern business. Indi- 
vidual business men and corporations include it in 
their practical calculations, yet its exact nature can 
not be determined. Despite all sound reasoning of 
advertising experts and accountants, despite all the 
beating of tomtoms by underwriters and promoters, 
goodwill is still the fourth dimension of business. 
It is there, but the difficulty lies in making others 
see it, and in making them see it as large as you 
see it." 



THE ENTREPRENEUR 115 

In a diagram Gilmore sets forth that goodwill is 
made up of the following component parts: compe- 
tition, patent rights, reputation for integrity, per- 
sonnel, trade names, condition of market, pending 
orders, franchises, established location, publicity, 
credit and annual earnings." 

Granting the reliability of the analysis, it 
requires but a brief examination to see that the ele- 
ments of goodwill may be classed, almost in their 
entirety, as creative wealth. The mystery is solved. 
Brains, the life-force of creative wealth, is the key 
to the answer, and in the answer lies the uncertainty 
of the value of the elusive goodwill. Following 
the parallelism of the fourth dimension, while there 
is an element of mysticism in the fourth dimension 
of business, it is not as subtle or evasive as the 
fourth dimension of space. The former is conceiv- 
able ; the existence of the latter can only be deduced 
by algebraic methods or processes of analogy. 

Taking up the various elements productive of 
goodwill and analyzing their qualities, we find, first, 
"competition," which means, if anything, the match- 
ing of wits with rivals, and hence is clearly creative 
in nature. "Patent rights" can be placed in the 
same category without argument, as can also "repu- 
tation for integrity" and "personnel." "Trade 
names" are valuable only in so far as the merits of 
the commodity and publicity extend. Both factors 
are plainly creative. "Condition of market" depends 
principally upon advertising methods, and this nat- 
urally falls under the head of creative wealth. As 
it requires intellectual force to secure "franchises" 
and hold them, this element is partially creative. 



116 THE CREATION OF WEALTH 

But as franchises are required only in a limited 
number of enterprises, this element is not constant. 
"Established location" means but very little unless 
there is push and energy behind the business. This 
element is almost wholly creative because it required 
foresight to select the location. "Publicity" and 
"credit" are purely creative in nature, while the last 
named, "annual earnings," is dependent upon all the 
previously named elements, and therefore mainly 
creative. 

It is evident that, in cases of businesses chang- 
ing hands, unless the personnel goes with it, the 
value of goodwill is problematical. 

And, finally, above all, the entrepreneur must 
possess character or "reputation for integrity." 

Perhaps the late J. Pierpont Morgan was the 
most brilliant exponent of efficiency that this coun- 
try has ever produced. He possessed nearly all the 
qualities needed by an entrepreneur in a superlative 
degree, and was one of the greatest constructive 
captains of industry. But he was greatly maligned 
and misunderstood. For example, a recent editorial 
in the Philadelphia North American says: 

"He [Morgan] believed that prosperity is cre- 
ated by dead weight and brute force of masses of 
money, whereas it is created by the efficiency of 
the average dollar, and he measured prosperity by 
bank balances and sales of securities, instead of the 
welfare of the average man." 

It would be hard to find in contemporary litera- 
ture an equal number of crass errors crowded into 
a single sentence. Morgan, in his testimony before 
the Pujo Money Trust Investigating Committee, 



THE ENTREPRENEUR 117 

made it clear that he placed more emphasis on char- 
acter than any form of collateral, "mass of money" 
or "brute force." It would be difficult to under- 
stand what the writer means by the "average 
dollar." One dollar is just as "average" and just 
as "efficient" as any other dollar. Perhaps he means 
the dollar of the average person. If so, this does 
not state an economic fact. The dollar of the aver- 
age person does not create wealth in the larger 
sense. It is the money invested in big enterprises 
that provides work for the millions and creates 
wealth. 

In the chapter on "Capital" it was endeavored to 
prove that character and capacity constitute the only 
real and lasting capital. Business men may gain a 
mushroom and ephemeral success by resorting to 
sharp practices, but it may be affirmed with assur- 
ance that the men behind great enterprises of 
stability and active growth must align themselves 
with the laws of nature and man. This is true for 
two reasons: First, subjectively, if a man violates 
the laws of nature, he begins to disintegrate, phys- 
ically, intellectually and morally (efficiency method 
number 9 — deleterious influences) ; and, second, 
objectively he must conform to the laws of the land 
or, sooner or later, his business will be sundered in 
a collision with a materialized statute or consumed 
by the fire of an incensed public opinion (efficiency 
method number 15 — economic environment). 

But to attain the very highest success, the entre- 
preneur must not only adjust his business to the 
principle of the fair deal, but must supplement the 
policy of cold honesty by the spirit of the helping 



118 THE CREATION OF WEALTH 

hand — ^the sacrificial spirit of "give" — in order that 
he and others may Hve. If the records of some of 
the most successful business men are examined, we 
will find that this spirit has animated them through- 
out their careers. 

In the first of a series of articles running in the 
World's Work on "Successful Business Men," the 
altruistic policies of the H, B. Claflin Company, of 
New York, are set forth in graphic manner. It 
tells how this great firm, with its many ramifications 
and branches, built up and retains its prestige; how 
it sends representatives to each of the States to 
study industrial conditions; how it helps struggling 
retailers to get on their feet — both in an advisory 
and financial capacity — and how it treats all with 
whom it has commercial intercourse with uniform 
consideration, courtesy and honesty. This was the 
policy of Commodore Vanderbilt, who in his day 
was the master of transportation on land and sea. 
He outdistanced his rivals because of his persistent 
adherence to the principle, "Better and still better 
service." 

But there are two other aspects to this "giving" 
spirit. The first (as above) may be designated as 
the "voluntary-altruistic-mutually-participating" prin- 
ciple. Then there are the "involuntary-altruistic- 
mutually-participating" and the "involuntary-altruis- 
tic-ob j ectively-participating" principles. 

The second principle, the involuntary-altruistic- 
mutually-participating, is that which runs through all 
successful business enterprises, as was exemplified 
under "dynamic" wealth. It was shown how this 
dynamic energy, directly and indirectly, provides 



THE ENTREPRENEUR 119 

employment for the many, and how it benefited all 
who had commercial dealings with the direct bene- 
ficiaries. 

The third principle, objectively-participating, 
applies to the unsuccessful business enterprise — to 
the pioneers who blaze a trail for others to follow. 
And it is asserted that statistics prove that ninety 
per cent, of all business men fail in their first under- 
takings. But how does this benefit others? it may 
be asked. In a number of ways. First, by giving 
employment to laborers, for a greater or less length 
of time. Second, by developing a new field of labor 
and industry. A railroad, for example, may be 
built into virgin territory, and, although it may 
suffer heavy loss for a number of years, it proves 
the means of putting a new field of action on the 
industrial map. Or, a corporation dealing in real 
estate may erect magnificent buildings on a tract of 
land which they are promoting, only to meet with 
great financial loss. Yet the presence of these 
buildings and improvements renders the adjoining 
property more valuable than before. This thought 
will be further expanded under "Single Tax," 
wherein it will be shown that the "unearned incre- 
ment" is largely a product of "creative wealth." 

The third principle also indirectly helps others 
by affording a sort of horrible example. Other men 
of enterprise, or the original promoter, may be able 
to profit by the mistakes he has made, and on the 
ruins of the industrial structure erect one of solid 
endurance. 

Within the past few years much has been writ- 
ten on "Industrial Efficiency" by such exponents of 



120 THE CREATION OF WEALTH 

the art as Taylor, Emerson and Gantt, and a great 
deal has been accomplished in the practical applica- 
tion of their methods to economic life. Their theo- 
ries and methods, however, are mainly defensive — 
a search for, and elimination of, "leaks"; a strenu- 
ous warfare against internal foes of a business 
enterprise. In this work the offensive methods of 
industrial warfare are magnified, without intention 
of minimizing the importance of the defensive plan 
of action. 

Harrington Emerson, in his treatise on "The 
Twelve Principles of Efficiency," brilliantly expounds 
the doctrine of defensive industrial methods. Some 
of his principles are partially offensive or con- 
structive, although he does not elaborate on this 
phase of the subject. His twelve principles are, 
Ideals, Common Sense and Judgment, Competent 
Counsel, Discipline, the Fair Deal, Accurate and 
Reliable Records, Planning and Despatching, Stand- 
ards and Schedules, Standardized Conditions, Stand- 
ardized Operations, Written Standards of Instruc- 
tion, Rewards for Efficiency. 

It will be seen that emphasis is laid upon the 
standardization of work, which consists in separa- 
ting from the line organization of a business a staff 
officer whose duty it is to set up tentative standards 
of performance ; to correct these standards by work- 
ing out scientifically the best methods of perform- 
ance; to determine the best inducements to the 
employee to attain these standards, and to instruct 
the employees in these perfected methods. These 
methods apply principally to the elimination of 
"waste," or the eradication of "leaks," such as 



THE ENTREPRENEUR 121 

unnecessary motions in the laborers and various 
kinds of wastes in the materials of production 
occurring in the general operation of a business 
enterprise. 

The "Ideals" of Emerson correspond, in a way, 
with the "creativeness" or powers of vision or fore- 
sight in the entrepreneur, the first of the fifteen 
"expression-forms." His ideals, however, are made 
to apply almost wholly to the operation of a busi- 
ness with a total disregard of the "initiative," or 
initial idea. His nearest approach to the latter 
principle is in his reference to James J. Hill and 
other captains of industry. He says of the former: 

"There is one great American railroad genius, 
always an idealist, who has arisen to the command- 
ing position in the railroad world because he had 
definite ideals. He states that a railroad company 
is to be managed to earn dividends; that expenses 
are by the train-mile, and receipts by the ton-mile. 
He has developed the country through which his 
road ran, and lowered rates, because this gave him 
more ton-miles. He has reduced grades and curva- 
tures, and used heavy locomotives on long trains, 
because this reduced the cost of train per mile. He 
has reached out for Oriental traffic, thus lessening 
the ton-mile cost. 

"Another great railroad executive, J. W. Ken- 
drick, regards disagreements with laborers as con- 
suming time and energy, destructive to peace, 
loyalty and harmony, and he therefore resolved to 
set up a high standard of discipline, based on the 
fair deal, and made attractive by efficiency rev/ard." 

It may be practicable to standardize the opera- 



122 THE CREATION OF WEALTH 

tions of machines and laborers of an industrial or 
commercial enterprise, but it is very difficult to 
standardize the mental operations of a "creative" 
man. It would not be advisable to do so, even 
though it were possible. And herein lies the differ- 
ence between the offensive and defensive efficiency 
methods. It will be observed that Emerson makes 
no reference to advertising and promotion in his 
twelve methods. This is but natural, since these 
methods are decidedly offensive or constructive. 
You can't standardize this kind of creative work. 

How would you go about to standardize the 
mind of an Edison, a Morgan, a Westinghouse, a 
Vail, a Carnegie, a Harriman or a Marshall Field? 
You could as easily put hobbles on a meteor or 
resolve into its constituent elements the aurora 
borealis. It is apparent that he who attempts to 
classify or circumscribe the actions of the normal 
brain of the undertaker and accomplisher of the 
business world of to-day is foredoomed to complete 
failure. 

About all that can be done is to take up the 
fifteen expression-forms and illustrate by examples 
from modern industrial life how the entrepreneur 
utilizes these forms of efficiency methods in the 
conduct of his business. If any one is not satisfied 
with our selections and classifications, he can choose 
his own examples (there are millions of them) and 
construct his own classifications, which will no 
doubt prove a more entertaining and instructive 
pastime. 

Before going into this analysis, however, it 
would be interesting to note that many of the trades 



THE ENTREPRENEUR 123 

and businesses are in themselves "expression-forms." 
For example, the cobbler, blacksmith, tailor, plumber 
and all "fixers" come under efficiency method num- 
ber 11 (eradicate deleterious influences in material). 
The banker may be classed under expression-forms 
numbers 2, 5 and 7. The principal function of the 
banker is to take care of our money — a very cheer- 
ful and altruistic habit — and to facilitate exchange. 
Money is a time and labor saving convenience, and 
in the form of capital is classified as material. Now, 
the banker very kindly permits you to draw checks 
on the money deposited with him, thus saving you 
the trouble of handling the cash. In the conduct 
of a business this rapid method of effecting com- 
mercial transactions is very essential and effective. 
The banker "augments" material by effecting loans 
and by paying interest on deposits. He also may 
be said to remove deleterious influences from mate- 
rial, by putting your money in "strong boxes." 

But, paradoxical as it may seem, the watchmaker 
is not a time-saver at all. On the other hand, he is 
an eradicator of deleterious influences in material. 
There are a great many processes in industrial 
affairs that require a fixed time for their consum- 
mation, such as the cooking of an egg or the tem- 
pering of steel, and it is necessary that the workmen 
be equipped with timepieces with which to gauge 
these processes. The deleterious influence is the 
possible destruction of the work which would ensue 
in the absence of timepieces. Negatively, therefore, 
the watchmaker must be classed under expression- 
form number 11. 

The trades and occupations cited, with the 



124 THE CREATION OF WEALTH 

exception of the banker, are exclusively material 
fixing or augmenting, and correspond to the pro- 
fessional "men-fixing" occupations of the physician, 
minister, lawyer, etc., which were "placed" in a 
previous chapter. Then, in addition to these classes, 
there are tradesmen who partake of the qualities or 
functions of both the material and labor fixers. 
They help cure diseases of land, labor and material. 
Foremost among this class is the druggist, who 
supplements the physician and chemist in their laud- 
able efforts to eradicate the deleterious influences 
preying on man, and on the soil and material 
objects. 

With the druggists must be classed the book- 
sellers and stationers who traffic in all sorts of read- 
ing-matter — ^books, magazines, papers and what not. 
Some of these publications aid in the cultivation of 
the mind, while others teach methods of manipu- 
lating material. But some of these products of the 
art preservative unfavorably affect the mind and 
general economic conditions, and this thought nat- 
urally leads to the consideration of other occupations 
and pursuits which have a similar effect on man. 

At the head of this class stands the saloon- 
keeper. It is not necessary to dilate upon the evils 
growing out of the excessive indulgence in drink. 
That this habit lessens the economic value of the 
laborer will not be contested. Of minor considera- 
tion are the confectioners, ice-cream and mineral- 
water manufacturers. Excessive use of these 
refreshing compounds have a deleterious influence, 
but this may be said of any sort of overindulgence. 
There is one thing that can be said in favor of 



THE ENTREPRENEUR 125 

these injurious indulgences — they make business 
good for the physician, druggist and, mayhap, the 
undertaker. And here is where the latter evens up 
(another example of triumph from travail). 

And with this "salvage crew" — the doctors and 
the druggists — should be classed the accident and 
life insurance companies, for they provide the phys- 
ical means wherewith to repair broken bones, bodies 
and fortunes. Other classes of insurance — fire, tor- 
nado and earthquake — correspond to, and co-operate 
with, the material-fixers, the blacksmiths, carpenters, 
and so forth. 

But what about the jewelers, haberdashers, milli- 
ners and all those classes who cater to the artistic 
and the esthetic? Do they contribute to economic 
efficiency? The answer must be — directly, they do 
not. But is it not possible that the gratification of 
the aesthetic sense may have a subtle eflfect upon 
one's general outlook, and thereby affect his general 
conduct? Does not this tend to render him more 
cheerful, and in a way, as with music, have a tend- 
ency to remove deleterious influences in the laborer? 
While there have been no experiments along this 
line, it is reasonable to suppose that, in some 
instances, at least, such an economic benefit does 
accrue. But, as previously stated, the prime func- 
tion of all these extra-economic or dynamic pursuits 
is to open new fields of labor for the great indus- 
trial army. 

In illustrating the importance of "creativeness," 
which includes the vision and the initiative, Sys- 
tem says : "Imagination is the motive power of 
business. Without the capacity to look into the 



126 THE CREATION OF WEALTH 

future, to anticipate development and to see risions, 
the individual worker is merely a mechanical unit 
of the great engine of trade." 

The editor of Life, in referring to the failure 
of Charles S. Mellen as president of the New York, 
New Haven & Hartford Railroad Company, said: 
"H he (Mellen) had not worked so hard, he might 
have been worth more, because the most valuable 
men are paid chiefly for sitting around and think- 
ing. The great efficiency is like what we read of 
the Almighty, who never lifts his hand, but drives 
the universe by what He is. One clear thought in 
a directing mind may be worth a year of faithful 
details. It always seemed as if Mr. Mellen drove 
himself too hard to think his best." 

In his biography of the late Mark Hanna, Her- 
bert Croly writes: "Mark Hanna's salient charac- 
teristic in business was the initiative. He was 
essentially, if not exclusively, an entrepreneur. He 
broke new ground. He started and developed enter- 
prises. In order to take advantage of these oppor- 
tunities, a man needed an aggressive will, an 
abundant energy, and an alert, shrewd and compre- 
hensive mind." An associate of Hanna says: "He 
was tremendously interested in anything new. If 
his judgment approved it, he was enthusiastic in 
pushing it and testing its value. But he quickly 
sensed a failure and turned to something else with 
equal energy and courage." 

In an article in the American Magazine on 
"Irving T. Bush, Builder of a Great Industrial 
Community," the following was said of him: 

"Some fifteen or eighteen years ago, Irving T. 



THE ENTREPRENEUR 127 

Bush had several million dollars, a big vision and 
less than thirty years of experience on earth. The 
fortune was inherited from his father, the vision 
arose from the peculiar geographical conditions of 
New York City. . . . The ideal industrial com- 
munity, thought young Bush, was where land was 
comparatively cheap, where working people could 
live at low cost combined with comfort, and espe- 
cially where factory, freight-car and steamship could 
all meet and kiss one another. So young Bush 
dreamed his great dream about some water-front 
sand lots he owned away down the harbor in South 
Brooklyn, On these sand lots he saw rising big 
warehouses and great industrial buildings containing 
every modern wrinkle," etc., etc. People who heard 
of the vision laughed, but Bush made it come 
true. How he accomplished the feat is well worth 
reading. 

Gerald Stanley Lee, author of "Inspired Million- 
aires" and "Crowds," says: "If the author had 
known when he wrote his book (the first named) 
some of the men he has known since, he would have 
expected more, and not less, of the business of our 
modern world; men who have made new and great 
professions out of the businesses in which they 
have been engaged; men who have thought nation- 
ally in their daily work ; men who, in stores and 
foundries, offices and factories, day by day, have 
lived and wrought like statesmen." 

The difference between the entrepreneur and the 
inventor in the initial step is slight. The inventor 
conceives the idea of a contrivance, the manufacture 
of which will amuse or benefit mankind. Material 

9 



128 THE CREATION OF WEALTH 

— that is, natural products — must be used in its 
construction. The entrepreneur perceives that a 
particular bit of scenery, a section of country, or 
other forms of wealth, can be advantageously 
exploited. In other words, it is the vision or insight 
of both the inventor and the entrepreneur which 
leads to the final consummation of their plans. One 
starts with the idea and ends with material, while 
the other reverses the process. 

John D. Rockefeller, in his autobiography pub- 
lished in the World's Work, details the steps lead- 
ing to, and the organization of, the great Standard 
Oil Company. He says, in part: 

"During the years when I was just coming to 
man's estate, the produce business of Clark & 
Rockefeller went on prosperously, and in the early 
sixties we organized a firm to refine and deal in 
oil. It was composed of Messrs. James and Rich- 
ard Clark, Mr. Samuel Andrews and the firm of 
Clark & Rockefeller, who were in the company. It 
was my first direct connection with the oil trade. 
In 1865 the partnership was dissolved; it was 
decided that the goodwill be sold to the highest 
bidder. I had made up my mind that I wanted to 
go into the oil trade on a larger scale, and, with 
Mr. Andrews, wished to buy the business. I 
thought I saw great possibilities in refining oil. 
The bidding began at $500. I bid $1,000; they bid 
$2,000, and the bidding continued until the price 
reached $50,000, which was more than we supposed 
the concern to be worth. Finally it advanced to 
$60,000, and by slow stages to $70,000, and I almost 
feared for my ability to buy the business and have 



THE ENTREPRENEUR 129 

the money to pay for it. At last the other side bid 
$72,000; without hesitation I bid $72,500. Mr. 
Clark then said, 'I'll go no higher, John; the busi- 
ness is yours.' 

"The firm of Rockefeller & Andrews was then 
established, and this was really my start in the oil 
trade. Everybody went into the business, and the 
price went down until the trade was threatened 
with ruin. It seemed absolutely necessary to extend 
the market for oil by exporting to foreign countries, 
and also to greatly improve the processes of refin- 
ing, so that oil could be made and sold cheaply, 
yet with a profit, and to use as by-products all the 
materials which, in the less efficient plants, were lost 
and thrown away. To accomplish this it was neces- 
sary to increase our capital by availing ourselves 
of the best talent and experience. It was with this 
idea that we proceeded to buy the largest and best 
refining concerns and centralized the administration 
of them with the view of securing greater economy 
and efficiency. This enterprise, conducted by men 
of application and industry, working hard together, 
soon built up unusual facilities in manufacture, in 
finance and in extending markets." 

Thus we have in his own words Rockefeller's 
story of the origin of the Standard Oil Company, 
and, if we read between the lines, an idea of the 
salient qualities of his mind can be obtained. He 
says that the firm of Clark & Rockefeller was pros- 
perous, proving that he had character and capacity. 
Then he had a vision of big things in the oil busi- 
ness, and when he started to bid on the goodwill 
of the dissolved firm, he was backed up more by 



130 THE CREATION OF WEALTH 

creative capital, the confidence born of achievement, 
than by the capital embodied in dollars and cents. 
It was apparent that he was determined to buy that 
oil business, regardless of price, for he did not stop 
bidding, even when he "almost feared" for his 
ability to purchase it. 

A short while after coming into possession of 
the plant, ruin stared him in the face. Did he lie 
down ? No ; he took another hitch in his galluses 
and pushed the business with renewed activity. To 
accomplish this, he resorted to a number of 
efficiency methods. When competition became 
strong and the price of oil was "shot to pieces," 
three protective methods were brought into play. 
They built up a foreign trade (efficiency method 
number 13 — ^advertising and promotion); improved 
the processes of refining by utilizing byproducts, 
etc. (efficiency method number 7 — ^material-augment- 
ing), and centralized administration by buying up 
other firms and securing new talent. In this con- 
centration is embodied efficiency method number 3 
(material-saving — reduced capital stock), efficiency 
method number 2 (labor-saving — permitted reduc- 
tion of working force), efficiency method number 12 
(eliminated obstructive elements — competition, etc.), 
and, lastly, efficiency method number 14 (manufac- 
ture of a better product). 

By building up a foreign trade the company 
relieved the congested home market, incidentally 
benefiting all oil refiners. Then, on the other hand, 
the great consuming class was benefited by the pro- 
duction of cheaper oil, made possible by perfecting 
the refining processes and centralizing administra- 



THE ENTREPRENEUR 131 

tion. And it must not be forgotten that this foreign 
trade could not have been built up if it were not 
for this concentration of effort and capital. This 
centralization benefited likewise all the competing 
companies which saw fit to become merged with the 
parent plant. If some, through a mistaken policy, 
lost out in their fight for independent manufacture, 
they were at least partially to blame for their 
unlucky plight. 

Of course, if we could go through the history 
of the company, we would doubtless discover all of 
the efficiency methods in almost constant use. 

But how shall we qualify the daring genius of 
that "Colossus of Roads," the late Edward H. Har- 
riman, who struck a new note in the song of rail- 
roading and astounded a continent? The Outlook 
said of him: 

"Among all the stories in American railroading, 
and it has teemed with the marvelous, few chapters 
are so extraordinary as the building of the Union 
Pacific system by Edward H, Harriman. The bold- 
ness of the conception, the magnitude of the under- 
taking and the constructive genius shown in the 
working out of plans, are all unusual features even 
in a day of undertakings that make for us every 
day new records in industrial history. . . . He had 
faith in the mysterious, hopeless-looking, wonder- 
working Western empire that is wrapped in its 
unending dream of sunshine beyond the Missouri 
River. He had the keenness of vision to map out 
within it a traffic confederation of unequaled 
strength, the determination to supply it with rail- 
ways — ^the best of their class in the world — and the 



132 THE CREATION OF WEALTH 

tremendous personality to persuade careful men to 
risk unheard-of sums of money to make good his 
plans." 

The story of how he purchased the Union 
Pacific; how the line was leveled down to a maxi- 
mum grade of forty-one feet per mile ; how he 
spanned the Salt Lake and the Bay of San Fran- 
cisco with great bridges ; how he improved the 
roadbed and established the block system of signals, 
and then, after he had done all this, how he reached 
out after other systems — the Southern Pacific, the 
Oregon Short Line, Illinois Central, Chicago & 
Alton and others — has often been told, and forms 
one of the great romances of industrialism. But 
to continue: 

"Mr. Harriman is auto-dynamic. His mind 
leaps over intermediate difficulties, because he 
knows they must give way to forceful endeavor 
and he has no time to waste on explanations or 
argument. It is not a matter of surprise that, 
under a brusque manner, we will find in Mr. Harri- 
man an inviolable regard for his word. Mr. 
Harriman's word is good. If one gets his promise, 
it is a promise that may safely be slept on." 

Here we have in Mr. Harriman the vision of a 
prophet, the initiative of a Csesar and the unshak- 
able, unimpeachable genius of right and might. 

A writer says: "Up at Arden he (Harriman) 
rides horseback, drives fast horses, motors about 
and golfs a little, and in the winter-time gets out 
with his boys on the ice. They play hockey and 
other games, and the battle is always hot. The 
play must be fair and according to the rules; if 



THE ENTREPRENEUR 133 

there is any violation of the rules, he goes over to 
the other side." 

Vision, initiative, resourcefulness and character 
were the dominant characteristics of the man, and, 
being such, any attempt to analyze his methods of 
efficiency must prove hopeless. One may well 
believe that he embodied all of the fifteen efficiency 
methods. As an example of his resourcefulness, 
one striking example may be cited: After installing 
the block system on the Union Pacific, he found 
that accidents still occurred with undue frequency. 
To remedy this, he abandoned tlie time-honored 
custom of having railroad officials report on the 
causes and cure of accidents, and turned the inves- 
tigations over to outsiders. After the railroad men 
recovered from the shock, it was found to prove 
increasingly effective. The fear of publicity had a 
tendency to hold in abeyance the more reckless of 
the engine-drivers and dispatchers. 

The "do-and-dare" spirit of the pioneer charac- 
terized the indomitable railroad rescuer and reviver. 
When the engineer in charge of the bridge-con- 
struction work at Salt Lake notified him that the 
job was impossible, that all of the piling was being 
swallowed up by the quicksands, Harriman tele- 
graphed back, "Go ahead and do it, whether it is 
possible or not." 

Let us see how many of the efficiency methods 
are found in Harriman's cutting down grades, 
eliminating curves, ballasting the roadbeds, pur- 
chasing adequate rolling stock and minimizing acci- 
dents on the Union Pacific Railroad. Efficiency 
method number 1 is represented in his vision of a 



134 THE CREATION OF WEALTH 

reconstructed road and a revivified country through 
which it passed. Number 2 (labor-saving) is found 
in the elimination of curves and grades. In this are 
also found number 3 (material-saving), requiring 
less material to construct the road; number 4 (land- 
saving) was the means of reclaiming waste land, 
and number 5 (time-saving) reduced the schedule 
nearly one-half. The ballasting and general im- 
provement of the road also affected these efficiency 
methods. 

The purchase of engines of a larger and more 
effective type served to augment material (number 
7), permitted the carrying of heavier loads. The 
introduction of the block system and other accident 
preventatives involve efficiency method number 9 
(eradication of deleterious influences in the 
laborer) ; number 11 (eradication of deleterious 
influences in material destruction of rolling stock) 
and number 12 (removed the obstructive notion of 
fear in travelers). And, finally, the general results 
— a wonderful modernized road — are represented in 
efficiency methods numbers 14 and 15. The latter 
applies to the melioration of economic environments 
and the former to the manufacture of a better 
article. While the railroader is not a manufacturer, 
in the strict sense of the term, yet he sells traveling 
and shipping service, and the improving of this 
resulted in a large increase in traffic. 

We will now take up Harriman's compeer, 
James J. Hill, and in the analysis it will be shown 
that, while the latter may not be as brilliant and 
daring in some ways as the late railway king, yet 
he is more painstaking, more comprehensive in 



TrtE ENTREPRENEUR 135 

efficiency methods, and has, therefore, probably ren- 
dered a greater service. 

Elbert Hubbard, in his "Little Journeys to Great 
Business Men," says: "But the work of James J. 
Hill is dedicated to time, and Clio will eventually 
write his name high on her roster, as a great mod- 
ern prophet, a creator, a builder. Pericles built a 
city, but this man has made an empire. Smiling 
farms, schools, factories and happy homes sprang 
into being in the sunlight of prosperity which he 
made possible, and as yet the wealth of the 'Hill 
country' is practically untapped." 

After describing Hill's mother as a woman of 
decided personality, strong in feature, frank, fear- 
less, honest, sane and poised, Hubbard adds : "James 
J. Hill is the son of his mother. His form, fea- 
tures, mental characteristics and ambition are the 
endowment of mother to son. He is a score of men 
in one, as every great man is. But when this 
kindly, philosophic, paternal, altruistic 'Yim Hill' is 
in the saddle you will see the significance of this 
story. A rear-end flagman at Galesburg was boast- 
ing to some of his mates how he had gone over the 
division with the new 'boss of the ranch.' 

"Here a listener put in a question, thus: 'What 
kind of a lookin' fellow is the ol' man?' and he of 
the lantern and torpedoes scratched his head and 
explained: 'Well, you see, it's like this: He looks 
like Jesus Christ, only he is heavier set.' 

"When James J. Hill became manager of the 
St. Paul, Minneapolis & Manitoba Railroad, in the 
latter part of the seventies, he sent over to England 
and bought hundreds of young Hereford bulls, and 



136 THE CREATION OF WEALTH 

distributed them along the Hne of the road among 
the farmers. Clydesdale horses were sent out on 
low prices and long-time payments. Farm seeds, 
implements and lumber were put within the reach 
of any man who really wished to get on. And lo! 
the land prospered. The waste places were made 
green and the desert blossomed as the rose." 

Mr. Hill had previously advertised land at 
attractive prices and terms and secured thousands 
of settlers, and, in furtherance of the cause of 
farming, he began to send young men to agri- 
cultural colleges. He believes in making men self- 
supporting and self-reliant. Hubbard continues: 

"In 1888 the St. Paul, Minneapolis & Manitoba 
became a part of the Great Northern. Hill had 
reached out beyond the wheat country into the arid 
zone, which was found to be not nearly so arid as 
we thought. The Black Angus and the white-faced 
Herefords followed, and where once were only 
scattering droves of skinny pintos, now were to be 
seen shaggy-legged Shire horses and dappled 
Percherons." 

When Hill saw that cheap lumber was needed 
by the settlers, he reduced the rates on lumber from 
the Washington mills to less than one-half of the 
actual cost of transportation. The loss was not as 
heavy on his road as on others because of the 
policy, universally adhered to, of establishing easy 
grades and reducing curvatures. A steadily falling 
cost of hauling freight, with greater expedition of 
same, has marked Mr. Hill's progress in the rail- 
road world. 

In 1909 one well-informed writer stated that 



THE ENTREPRENEUR 137 

Hill had more transportation interests than any 
other one on the continent. In his Great Northern 
system are 7,000 miles of track, in the Northern 
Pacific he has about 5,000 miles, and in the Burling- 
ton system 8,000 miles, and he says that we need 
115,000 miles more of railroad tracks to properly 
develop the West. 

When Mr. Hill proposed to build a railroad 
through a wilderness to the Pacific, Wall Street 
laughed at his request for money. It did not run 
from one big city to another big city. Mr. Hill 
went to London, Montreal and other foreign cities 
and secured the sum required to build the Great 
Northern. By close attention to details and by 
working, as some one says, twenty-four hours a 
day, he made the road pay dividends from the start, 
and all of the original stockholders have recovered 
the amounts invested in dividends and bonuses with 
interest. 

What are James J. Hill's predominant qualities? 
Remarkable foresight, rugged honesty, intense con- 
centration and application, and adeptness in applied 
mathematics are salient characteristics of the man. 
In the light of these qualities and what he has 
accomplished, let us try to find his place in the 
world of efficiency. 

In the analysis we discover that he embodied all 
of the methods of Harriman, and did all that 
Harriman did, and more. He had the initiative 
and the courage to break new ground, and yet 
he was wonderfully practical, precise and pains- 
taking. 

Then, he reduced grades and abolished curves, 



138 THE CREATION OF WEALTH 

installed adequate and efficient rolling stock, mam- 
moth engines and safety appliances. All of these 
innovations, as with Mr. Harriman, saved labor 
(number 2), saved material (number 3), saved land 
"(number 4), saved time (number 5), augmented 
material (number 7), eliminated obstructive ele- 
ments (number 12), eradicated deleterious influ- 
ences in men and material (numbers 9 and 11), and 
the general results, better service and melioration 
of environments (numbers 14 and 15). 

But, in addition to all this, Mr. Hill interested 
himself in the farmers, introducing improved varie- 
ties of stock and seed and the education of young 
men in the agricultural science. These efficiency 
methods are represented in number 8 (land-aug- 
menting) and number 10 (eradication of diseases 
in land products). We have here in Mr. Hill all 
of the fifteen efficiency methods except numbers 6 
and 13 (labor-augmenting and advertising). It is 
taken for granted that both Mr. Hill and Mr. Har- 
riman advertised extensively, as well as adopted 
other means and methods of promotion, and there 
is no reason to believe that both did not make use 
of efficiency method number 6. For, despite all 
that the efficiency experts may say, their methods 
are as old as man himself. We have in James J. 
Hill all of the fifteen "expression-forms," efficiently 
embodied and applied to practical life. 

We discover also in Mr. Hill a remarkable 
example of the reacting and interacting benefits 
accruing to altruistic practices. 

Having taken a general survey of the efficiency 
methods employed by the so-called captains of 



THE ENTREPRENEUR 139 

industry, suppose we get a little closer to earth and 
endeavor to analyze the methods adopted by the 
ordinary business man in every-day life. As before 
explained, the person engaged in industrial enter- 
prise must deal with both machines and men, mate- 
rials and records, money and accounting, and, there- 
fore, has a more complex and difficult task than the 
man of independent activity, such as an inventor, 
or the professional man, tradesman or laboring man. 
Among the latter are clerks, accountants, book- 
keepers and a variety of specialists, each having an 
economic function corresponding to one or more 
efficiency methods, which will be pointed out as we 
go through a day's work of, say, a dealer in general 
merchandise in a country town. 

The proprietor of such a store, in which you 
can purchase anything from a thimble to a thresh- 
ing-machine, upon arriving at his office one morn- 
ing, found his manager in a "stew" and a quandary 
over a lot of Civil War pictures which were pur- 
chased some time before, but for which no market 
could be found. When his attention was called to 
this state of affairs, the proprietor recalled that 
there was to be a Grand Army reunion in the city 
the following week. He at once sent for his adver- 
tising man, who, of course, represents efficiency 
method number 13, and instructed him to prepare 
an ad for the newspapers directed especially to 
these veterans, offering them special inducements in 
the purchase of the pictures (efficiency method num- 
ber 1). To accompany the ads there was to be a 
near facsimile of a five-dollar bill, which was to 
be accepted as part payment for the pictures. The 



140 THE CREATION OF WEALTH 

advertising man went to a phonograph in the estab- 
lishment (efficiency method number 5 — time-saving) 
and dictated the advertisement as the powers of his 
imagination conceived it should be, whereupon his 
stenographer, who is at once a time-saver (number 
5) and labor-augmenter (number 6), having 
acquired the "touch" system and other short meth- 
ods of typewriting, took the dictation from the 
phonograph and transcribed it on the typewriter, 
which is a labor-saving device (number 2). In 
preparing the copy for the various papers, dupli- 
cating carbons were used (time and labor saving 
devices), and in despatching the letters containing 
the advertisements, stamping, folding and sealing 
machines were brought into play (all time and 
labor savers). 

These advertisements in due time reached the 
eyes of the Grand Army men, who could not resist 
the temptation to make use of the five-dollar device, 
with the result that the pictures were sold at a fair 
margin of profit. 

The credit man, who, as a conserver of money, 
represents efficiency method number 3 (material- 
saver), came to the proprietor and made a report 
on a certain doubtful risk. The latter instructed 
the bookkeeper, who, as an accountant, is a labor 
and time saver (numbers 2 and 5), to prepare a 
statement of the doubtful creditor's account. This 
was done by means of adding and calculating 
machines (both time and labor savers). After full 
investigation it was decided to secure the debt with 
a mortgage on the debtor's property, which was 
accompHshed just before the latter made an assign- 



THE ENTREPRENEUR 141 

ment. This transaction embodied efficiency method 
number 3 (material-saving). 

Upon reading the papers that morning, the pro- 
prietor discovered that a cold wave was approaching 
from the West, and as old mother hen is temper- 
amentally affected by the weather, he summoned the 
purchasing agent before him, with directions to buy 
up all the eggs in the surrounding territory. The 
purchasing agent, whose function it is to buy things 
cheap, is a material-saver (number 3). The selling 
agent and salesmen, who represent efficiency method 
number 7 (material-augmenters), as well as number 
13 (promoters), were instructed to raise the price 
of eggs, which resulted in a general augmentation 
of outgoing merchandise of that character. 

About this time a representative of the loan 
department, who is a material-augmenter (number 
7), appeared at the office and reported an oppor- 
tunity offered to effect a loan of some non-working 
capital at a more attractive rate of interest than 
it was then bringing. The discount man, who 
is a material-saver (number 3), reported that the 
time was about to expire on a number of bills on 
which a certain per cent, discount was allowed for 
cash. The discounts were made and the "material" 
saved. 

Two farmers appeared at the store at this time, 
one of whom wanted ditch-digging and tile-laying 
machines for the reclamation of some swamp land, 
and the other wanted a panacea for an epidemic 
that was decimating his drove of swine. The pro- 
prietor directed the former to the department where 
the latest improved machines of the kind desired 



142 THE CREATION OF WEALTH 

were to be had, and the purchases were made (effi- 
ciency method number A — land-saving). To the 
other farmer the proprietor recommended a new 
discovery for the cure of the diseases affecting his 
hogs, which, after being tried, was found to be 
effective (efficiency method number 10 — eradication 
of diseases in land products). 

A third farmer asked for a fertilizer adapted to 
a particular kind of soil. Upon the advice of the 
proprietor of the store, a fertilizer was purchased 
and applied to the land with great success (efficiency 
method number 8 — land-augmenting). 

The manager reported the arrival of a large 
consignment of a new style of shoes, whereupon the 
proprietor sent for the window-decorator, who is 
efficiency method or expression- form number 13 
(advertiser), and directed him to make an attractive 
display of the shoes. The decorator conceived the 
novel idea of so arranging the mirrors in the win- 
dows as to reflect the feet of the passers-by, who, 
upon being reminded of the shabby and out-of-date 
styles of shoes worn, would be impelled to purchase 
the latest patterns shown in the display. 

A large number of sales were made as a result 
of this experiment, and as the cash was received 
it was rung up on the cash register. Now, what 
efficiency method does the register represent? Not 
time or labor saving; on the contrary, it consumes 
time. It evidently comes under the head of number 
12 (eliminator of waste in the operation of a busi- 
ness; avoids errors and mistakes on the part of the 
cashier). The copy-press and all recording devices 
also come under this head. They preserve records, 



THE ENTREPRENEUR 143 

thus eliminating wrangling and disputes over busi- 
ness transactions. 

The proprietor observed that he was not secur- 
ing as much of the country's business as he might, 
owing to inadequate accommodations for the farm- 
ers' teams. He formulated a plan of entering into 
a contract with the most centrally located liveryman 
to redeem "standing-in" coupons, which he would 
issue to certain farmers on his mailing-list. By this 
arrangement all persons purchasing a dollar's worth 
or more of goods would be entitled to livery care 
for one horse. This scheme, which embodied 
efficiency method number 15 (melioration of envi- 
ronments), had the desired effect, it being found 
that the profits from the increased trade more than 
compensated for the extra expense incurred. 

The proprietor observed that a number of his 
employees were becoming languid and careworn, 
apparently from a lack of physical exercise. He 
accordingly had a gymnasium constructed in con- 
nection with a rest and reading room, to which all 
were granted free access. A general improvement 
both in the physical and mental conditions, as well 
as the esprit de corps, of the employees was secured 
from the introduction of this innovation. This was 
efficiency method number 9 (eradication of dele- 
terious influences in the laborer). 

Having read and heard a great deal of the 
results accomplished by "efficiency experts," the pro- 
prietor entered into a contract with one to "stand- 
ardize" his business. After a vigorous search for 
"leaks," many improvements were made in the 
arrangement of the store fixtures and goods, result- 

10 



144 THE CREATION OF WEALTH 

ing in an increased storage capacity (number 7 — 
material-augmentation) ; also facilitated the trans- 
action of business (numbers 2 and 5 — labor and 
time saving), and eliminated waste in fuel and 
other commodities (number 3 — ^material-saving), 
and by the introduction of a system of prizes for 
the salespeople selling the most goods, augmented 
the work of the force (number 6 — labor-augment- 
ing). The expert also remedied defects in machin- 
ery (number 11 — eradication of deleterious influ- 
ences in material). 

The proprietor had adopted a universal practice 
of discarding goods of an inferior quality when a 
better product was put on the market, which is rep- 
resented in efficiency method number 14 (sale of a 
more serviceable or attractive article). 

The alluring and compelling nature of adver- 
tising (efficiency method, or, rather, expression-form 
number 13) is of such comprehensive far-reaching- 
ness in economic life as to call for special attention. 
In modern business, advertising has developed into 
a science, and it is estimated that upwards of 
$500,000,000 is spent annually in the United States 
for newspaper and other forms of advertising. As 
advertising, in print form, represents only one phase 
of business promotion, the actual outlay is far in 
excess of the figures quoted. 

What is the purpose or function of advertising? 
Evidently to bring the buyer and seller together. 
It holds a position in the commercial world analo- 
gous to the spark that sets off the explosive in a 
mine, or sends the Hertzian wave across the seas. 
In each case economic factors are brought together. 



THE ENTREPRENEUR 145 

which otherwise would have remained inert and 
unproductive. 

But the ever-present iconoclast will doubtless 
ask, "How can a non-productive function like adver- 
tising produce wealth? It only facilitates the trans- 
fer of commodities from one person to another — 
possessing naught of a creative nature." Admitting 
the force of the criticism, is it not possible that a 
mutual benefit may accrue from an interchange of 
commercial products? A merchant advertises a 
more attractive or serviceable article of wear. Does 
the purchaser lose anything by the bargain? Or 
the farmer reads of a labor-saving device, which 
he purchases and applies to his daily work. Does 
he not benefit by the transaction? 

But the buyer and seller are not the only ones 
who reap a benefit from advertisement, for the 
paper which publishes it is also rewarded, and, nat- 
urally, all who are employed on the paper are indi- 
rectly benefited. And the benefits do not end here. 
As a result of securing a large amount of adver- 
tising, the publisher is able to sell his product for a 
nominal sum — from a penny up. Here is where the 
great common people come in for their share of the 
profits. Suppose the original purchaser of the 
thing advertised is "stung," there still remains a 
beneficent economic residue, and he should be con- 
soled with the thought and proudly point to himself 
as a public benefactor! 

Advertising mediums include newspapers, maga- 
zines, trade journals, catalogues, almanacs, pam- 
phlets, circulars, posters, handbills, billboards, elec- 
tric and other varieties of signs, street-cars, etc., 



146 THE CREATION OF WEALTH 

etc. The advertiser must use his judgment, not 
only in the preparation of the advertising matter, 
but also in the selection of the medium. 

Other means of advertising and promotion are 
through personal solicitation and representatives or 
salesmen. Millions of dollars are spent annually by 
drummers in traveling from point to point and in 
banqueting and feting their prospective customers. 
For example, a certain real-estate promoter spent 
$100,000 in the charter of a special train to convey 
a number of bankers to the Canadian Northwest. 

In addition to all these methods there are a 
large variety of advertising schem.es which have 
been put into practice. Window displays are in 
universal use, and, then, there are all sorts of prize 
contests, guessing contests, trading stamps and 
premiums, novelties and ingenious devices innumer- 
able. There are advertising agencies which prepare 
ads and insert them in desirable mediums for a 
large coterie of customers, and the general demand 
for a good ad writer is so great that the salary 
commanded is among the highest of all "literary 
gents." 

And all of this requires great imaginative and 
visionary powers and faculties. When Napoleon 
caused the names of his dead soldiers to be inscribed 
on the face of Pompey's Pillar, some one criticized 
the act as "a mere bit of imagination." "That is 
true," replied Napoleon, "but imagination rules the 
worid." 

Lorin F. Deland, writing intht Atlantic Monthly 
on "Imagination in Business," after enumerating a 
number of instances illustrating the title, says: "If 



THE ENTREPRENEUR 147 

space permitted, it would be worth while to enumer- 
ate the great variety of problems which arise in 
business. To every one of these problems, imagina- 
tion, if you will employ it, will open the door. It 
is not enterprise, nor thrift, nor industry, nor 
sagacity, nor courage. Nor can all of these quali- 
ties combined supply the place left vacant by the 
lack of imagination. They each have their value, 
and by any of these roads a man may win success. 
But the faculty of which I conceive makes him 
capable of undertaking any business." 

In illustration of the power of imagination he 
cites an example, among many : Two peddlers were 
standing side by side selling toy dolls. One of them 
had a queer, fat-faced doll, which he was pushing 
into the faces of passers-by, giving it the name of a 
well-known woman reformer. His dolls were sell- 
ing rapidly, v.^hile the man beside him, who really 
had more attractive dolls, was doing comparatively 
little business. This was observed by a European 
publisher, who, calling the second peddler to one 
side, said: "My friend, do you want to know how 
to sell twice as many dolls as you are selling 
now? Hold them up in pairs, and cry them as 
'The Heavenly Twins.' " It was at a time when 
Sarah Grand's famous novel was at its height, and 
success was instantaneous. Within an hour the 
woman-reformer doll peddler gave up the fight and 
moved away. 

Dramatized selling points are now being exhib- 
ited by moving-picture machines. The object is to 
reveal superior methods of manufacture, and the 
application has solved one of the baffling problems 



148 THE CREATION OF WEALTH 

of the retailer — that of giving his clerks a factory 
background and an acquaintance with manufactur- 
ing processes to illuminate and to give convincing 
quality to their selling talks. 

Department stores have imitated hotels in the 
introduction of parlors, letter-writing rooms, res- 
taurants and, in some instances, musical devices to 
entertain their patrons. More than any other class 
of men, sales-managers have drawn freely upon 
other fields for ideas and methods in handling their 
temperamental forces. From sport to war, they 
have adapted the principle of team or corps compe- 
tition, pitting groups of salesmen against other 
groups. This was one of the effective methods 
adopted by Colonel Goethals in building the Panama 
Canal. 

The "package" system keeps out dirt and flies, 
makes trademarks possible and substitution almost 
impossible, thereby justifying enormous and profit- 
able advertising campaigns, and takes control of the 
market from jobbers and retailers and accomplishes 
a score of other economic benefits. 

An Indiana laundry advertises, "The slowest 
laundry in the State." It emphasizes the advantages 
of slow laundering, in avoiding "wear and tear." 
A grocer doubled his sales within two years by a 
strenuous campaign for telephone orders. During 
an epidemic of disease in his town he installed 
double telephone service and advertised extensively 
that no customer need expose himself nor endanger 
others. No opportunity to advertise his telephone 
number is overlooked. On his monthly statements 
the telephone number is all that appears at the head, 



THE ENTREPRENEUR 149 

and he frequently adopts the same plan in signing 
advertisements and letters. 

And, as an example of the uses of imagination 
in the humblest occupations, and as a fitting close 
to this chapter, we will quote what Jean Millon, 
chef of the Ritz-Carlton Hotel, New York, said (as 
reported by the New York Herald) when fined 
$3,000 by the courts for classing the members of 
his profession as artists, rather than as common 
laborers : 

"Mais, Monsieur," said the incomparable chief 
cook when I saw him in his viand atelier construct- 
ing a confection, sculptor-fashion, and limning in 
delicate violet hues, even as would an impressionist 
painter: "I give you my word that I have reason to 
say that in Paris a cook is no mere mechanic, a con- 
tract laborer. I admit I brought three fellow-crafts- 
men — shall I say artists? — three cooks, if you please, 
and I find them most costly. And yet, although 
your laws here do not say so, may not the time 
come when it will be said that the cook who gives 
to his work the grand spirit, the imagination, the 
thought and study that one must to please a public 
which grows more discriminating, is something 
more than a workman?" 

After referring to the great cooks of France — 
Vatel, Soyer, Escoffier — "cook, if you please, but 
scholar and artist" — and Benaro, he adds : 

"Voila — I have here flour, eggs, baking-powder, 
butter. There is not far from here a studio build- 
ing. In one room I see a man with a lump of 
clay; in another, one with a frame on which cloth 
is spread, and he has brushes and paints. Common- 



150 THE CREATION OF WEALTH 

place materials, you say. What is more common 
than the clay of the sculptor, than the colored min- 
erals of the painter, and the grand grain of the 
cook ? 

"If one models clay without imagination, or 
molds it after a set pattern, he is a mechanic; if 
he puts his soul into his work and originality, he is 
the artist. If one without skill mixes flour and 
water and other articles, he may be called the work- 
man, but he is the true cook when he invents and 
prepares that which is a delight to mankind, and 
that out of the most ordinary material. So I say 
that a cook may well be an artist, just as the sculp- 
tor who models, as the painter who puts pigment on 
cloth, the craftsman who mounts the jewel with 
artistry." 

But here we find our great cook encroaching 
upon the following chapter, which is to be devoted 
to forms of wealth, as found in expressions of the 
beautiful and artistic! At any rate, Millon's dis- 
sertation affords another example among the thou- 
sands wherein the useful and the beautiful, the com- 
monplace and the artistic are "hopelessly inter- 
mingled." 



VIII. 
Winsome Wealth. 

In previous chapters were set forth some of the 
ways in which representatives of the various arts, 
trades, professions and pursuits create wealth in 
connection with the so-called economic or industrial 
enterprises. But, after all, he who contends that 
this aspect of life is the biggest and best has a very- 
sordid and unimaginative outlook on the world in 
general and on humanity in particular. 

Nature does not spurn the beautiful, the grand, 
the dramatic ; nor does she despise the awesome, or 
the harmonies and humors of life. Her devotion 
to the beautiful and grand are shown forth from 
the towenng Himalayas, the Andes or the Rockies; 
from the peaceful lakes and sinuous rivers to the 
delicate traceries of a leaf, a flower or a crystal, 
while dramas, tragic and deadly, are being enacted 
on the forest stage with the lions, jaguars and 
rhinoceri as stars ; and, ever and anon, from the 
upper wings, or "flies," the mighty Jove hurls down 
alternate shafts of fire and flame to the ominous 
roll of his aerial drum. The comedies may be per- 
formed under starlit skies to the accompaniment of 
winged orchestras, and the cast of characters may 
include the laughing hyena, the graceful gazelle and 
the playful squirrel. 

Surely, to the person who has witnessed the 

151 



152 THE CREATION OF WEALTH 

glories of a New England Indian summer, with its 
riots of tints and inimitable imagery, the essential 
aesthetic nature of Nature is apparent. And it was 
not intended that man should devote his life to the 
pursuit of the useful, with a total disregard for the 
artistic and the joyous. Man has desires and aspira- 
tions above the (we were about to say animal, but 
even these have a sense of mirth and beauty) — -let 
us say, then, clod of the field. These desires demand 
satisfaction, and those who can gratify them are 
entitled to reward. 

But there are those who would tear the stars 
from the firmament and silence the music of the 
spheres. 

If only the utilities are to be considered in eco- 
nomic discussions, what are we to do with the great 
artists, Titian and Michael Angelo? the great actors, 
Booth and Jefferson? the great musicians, Handel 
and Mozart? the great poets and writers, Homer 
and Milton, Virgil and Shakespeare? Then, what 
are we to do with the thousands of latter-day 
authors, artists, actors, musicians, sculptors, archi- 
tects and all others who have contributed their part 
in making the wondrous world of the twentieth 
century? If only the useful things are of worth, 
and all the rest pernicious luxuries, let us strip the 
world of the latter and see what is left. 

If, upon arising, you should call for the morning 
paper, the maid would politely inform you that the 
daily Sun (Moon or Star) has been stopped by 
order of the utilitarian economists. You are invited 
out to the breakfast-table, and, upon being seated, 
you ask for an orange or a canteloupe. You are 



WINSOME WEALTH 153 

gently but firmly informed that these luxuries have 
been dispensed with, and likewise cofifee, tea and 
cocoa, and all forms of modern breakfast-foods. 
After partaking of a breakfast of fried eggs or 
meat and bread (and water), you summon your 
automobile to convey you to the office. Your 
chauffeur informs you that the economists have 
put the ban on the auto business. Well, you 
conclude to take a street-car, only to find that 
they have all stopped running — utilitarian economist 
again. 

Upon arriving at the office, after a long walk, 
you find the once palatial suite of rooms stripped 
bare, with the exception of a few old-style desks. 
There are no telephones, no typewriters and none 
of the devices which were wont to expedite the 
day's work. Feeling somewhat blue, you put on 
your hat and proceed to the elevator (which has 
stopped running) and walk down several flights of 
stairs with the purpose of taking a stroll and a 
smoke. You find that all of the cigar-stores are 
closed. You enter a drugstore to purchase a 
"soda," only to discover that the fountain has 
"dried up." You ask for some chewing-gum as a 
compromise, and are met with a blank stare from 
the proprietor, who tells you that the economists 
have placed gum on the forbidden list. Upon 
observing the showcases, you see that they have 
been robbed of all forms of luxuries — perfume and 
powder, candies and confections, mirrors and mani- 
cure sets. 

The streets at this time were becoming thronged 
with people of both sexes. Where has all their 



154 THE CREATION OF WEALTH 

finery gone — ^their silks and satins, their flashy jew- 
elry and picture hats? All are garbed in the plain- 
est of clothing, without color or ornament. You 
turn your attention to the men and find that a like 
transformation has taken place. All are clad in 
rough garments, void of garnishment of any sort — 
no neckties, no silk hats, no fancy vests or shirts 
or tan shoes. 

Proceeding further, you attempt to enter a mov- 
ing-picture show, but find the doors barred. Dis- 
concerted and discouraged, you rush toward a cor- 
ner saloon, but meet with a like rebuff. You are 
getting wild; you make a dash for a hotel, only to 
find everything closed, with the exception of the 
dining-room, where only the most substantial of 
edibles are being served. 

As you walk along the streets, you notice that 
all confectioneries, haberdasheries, millinery and 
fancy dry-goods stores, jewelry shops, bookshops, 
music-stores, toy-stores and all kinds of amusement 
places are closed. You try to enter the public 
library and then start for home. When you arrive 
where your home was, you find nothing but a one- 
story shack, built of the most inexpensive materials. 
You enter the house, and, after being greeted by 
your wife, who, in her ancient garments, you hardly 
recognize, take a look around. All of the mahog- 
any, walnut and oak furniture has been removed 
and replaced with pine and poplar pieces of the sim- 
plest character. The pictures had been taken down 
from the walls, the piano and phonograph removed 
from the parlor, and the books from the library. 
All of the costly china, the silver plates, knives and 



WINSOME WEALTH 155 

forks have been exchanged for common steel cut- 
lery and the plainest of dishes. 

As a last resort, you decide to take the children 
to the Zoological Gardens to see the animals. In 
passing through the fine residential suburbs you dis- 
cover that all of the beautiful buildings and lawns 
have been destroyed, and that in their places were 
unpretentious domiciles and unkept and flowerless 
lawns. The church buildings, hospitals and other 
public institutions had suffered a similar fate, all 
forms of elaborate architecture having been reduced 
to the simplest styles. 

You arrive with your children at the "Zoo." 
Here at last, and at least, you will find solace and 
enjoyment, for are not all these animals — the ele- 
phants, the lions and the birds — Nature's offspring? 
No luxuries here. But you are informed by the 
gatekeeper that you can observe these animals all 
you like in their native heath, but to do so in civil- 
ized places is a wanton waste. 

Disconcerted, discouraged and disgusted, you 
conclude to remove to a foreign country. After 
having gotten your belongings (what is left of 
them) together, you start for the depot with the 
intention of taking the Chicago & New York Lim- 
ited for the latter city. Arriving at the station, 
you find the doors closed and the gates to the tracks 
barred. A simple sign read, "Closed by the Econo- 
mists." 

You hunt around for a horse and wagon with 
which to make the trip. Before starting you tried 
to telegraph to the steamship line for reservations, 
but was told that the line was not working. Hav- 



156 THE CREATION OF WEALTH 

ing arrived in New York, you hasten to the steam- 
ship office, only to be informed that the boats had 
been stopped by the utilitarian economists. "What's 
the use of going to another country, when there 
is plenty of vacant land in this country to culti- 
vate ?" they query. And echo answers, "Back to the 
farm." 

"At any rate," you say, "we will take a look at 
Broadway." You started up — but, what's this? 
There wasn't any Broadway there — nor New York. 
But there, in all its glory, was New Amsterdam! 

In your dreams that night you had a vision of 
"America" as played at the Hippodrome, wherein 
are pictured and portrayed the wonders of the East 
and West and the Panama Canal, the last and 
greatest wonder, and that after the show you vis- 
ited the Ritz-Carlton, presided over by our famous 
chef, and there partook of viands rich and rare — 
and then you made the mental reservation: "This 
is all a fake; there are no such things." 

But we, the non-economists, know that there are 
such things, for have we not seen them in reality 
as well as in pantomime? And how fortunate it is 
for us all that the dream is a reality. It is good for 
us that such things be, for at least four reasons: 

First, from a general economic viewpoint, it is 
good for us, because civilization, as manifested in 
the world to-day, is a product of these forms of 
creative and dynamic wealth. In the foregoing 
parable we allowed you to retain some supposed 
necessities that are really luxuries — such as plain 
clothing, household furniture and knives and forks. 
These are all forms of luxury, for they can be dis- 



WINSOME WEALTH 157 

pensed with, as with primitive man and with peo- 
ples in certain parts of the world to-day. 

If, then, some of our ancestors had not desires 
and aspirations above their fellows, there would 
have been no progress. In some instances these 
dynamic forms of wealth may have been called 
forth by a demand from a portion of the populace, 
while in other instances men of supernormal genius 
may have invented a device or produced a work of 
art which answered a need or caught the fancy of 
the proletariat. The automobile and the flying- 
machine are modern examples of the first kind. The 
former answered a half -century of appeals for a 
practicable motor-car, while the latter was the real- 
ization of the dreams of centuries. Instances of the 
second class may be found in ancient and modern 
artists, architects, sculptors, poets and philosophers. 
All of these creative geniuses open up new fields of 
labor, and in that manner confer an economic boon 
upon the great industrial army. 

Second, it is good for the creative geniuses that 
such things be, because it affords them a remuner- 
ative outlet for self-expression. In the olden days 
— when Greece was in her glory and the great 
Roman Empire was in the ascendancy — some of 
these creative men, sculptors, artists and architects, 
found remuneration for their labors as expressed 
in concrete form, but the writers, poets and philoso- 
phers found it necessary to eke out a living as best 
they could. What a harvest for the authors (and 
publishers) would there have been had the art of 
printing been discovered in the times of Homer, 
Virgil, ^schylus, Socrates or Plato! 



158 THE CREATION OF WEALTH 

If some would contend that all this winsome 
wealth does not constitute productive wealth, the 
answer is, it is productive of a living to millions. 

It is like the story of the Irishman thrown into 
jail without bond or bail, who, upon being informed 
by his attorney that they could not legally put him 
behind the bars, said : "Faith and begorra, I'm here, 
annyhow!" If it be asserted that those engaged in 
intellectual pursuits would not be considered pro- 
ducers of economic wealth under other conditions — 
for example, in a country where the soil is unpro- 
ductive and where primitive methods of agricul- 
ture prevail — ^the answer is that conditions as they 
obtain to-day can only be considered. It would be 
necessary to go to some other world — a few isolated 
spots excepted — to find conditions similar to those 
stated. The earth on which we live is welded by 
bands of steel and laced with wire into a harmo- 
nious and interacting whole, the various parts of 
which are in constant intercommunication. Com- 
merce has been freely developed between all sec- 
tions, and if there is a famine anywhere the fact is 
known at once, and ships and trains are despatched 
immediately on their errands of relief and mercy. 

Just as an illustration of the manner in which 
new kinds of wealth are produced and how things 
uneconomic have become commercialized, a citation 
may be made of the theater. With the Greeks it was 
simply an exponent of the drama or sestheticism ; 
in the Middle Ages it was adapted to religious uses, 
while in the early English life it was transformed 
into a royal or state form of entertainment. It has 
now become thoroughly commercialized. And, as a 



WINSOME WEALTH 159 

further illustration of the stupendous proportions to 
which these dynamic structures have grown, John 
C. Freund, editor of Musical America, estimates 
that $600,000,000 is spent annually in the United 
States for music alone. In this estimate are included 
operas, concerts, church music, orchestras, bands, 
musical instruments, books and publications, and 
academies of music. He adds: 

"The importance of these figures will be dis- 
closed only when we come to analyze them. They 
mean that we spend three times as much on music 
as we do on the army and navy, or as we do on the 
postal service; that we spend on music within 
twenty per cent, of the value of the hay crop, which 
is the biggest crop of the country, and within fifteen 
per cent, of the cotton crop, which is the next 
largest crop." If this is true of music, it is clear 
that the wealth evolved from books in general, mag- 
azines, papers and things theatrical, runs into bil- 
lions. 

Another illustration of the evolution of the 
growth of dynamic wealth is found in modern base- 
ball. This national sport, which has grown to stu- 
pendous proportions, was non-economic in its 
beginnings, whereas at the present time thousands 
are supported by and on the rapidly ascending 
economic structure. Salaries in excess of $10,000 
are frequently paid to players who are valued any- 
where from $25,000 to sums representing unpur- 
chasable commodities. (Will the economists who 
contend that man is not wealth please explain the 
status of the ballplayer?) 

Third, it is good for all of us that these luxu- 
11 



160 THE CREATION OF WEALTH 

ries exist, for they satisfy intellectual and physical 
requirements. All are endowed with mental quali- 
ties — ^more or less developed — appreciative of the 
beautiful, the humorous, the dramatic, the artistic, 
the picturesque and the sublime. If there be aught 
of poetry, music, or of inspirational thought or elo- 
quence, let us aspire to these also. It is just as 
necessary that the intellectual and aesthetic sides of 
our natures be fed and developed as the physical. 
The latter not only requires food of a substantial 
quality to build the body, but also of a pleasing 
quality to satisfy the sense of taste. All forms of 
edibles (not harmful) which supply these cravings 
are of economic worth. 

The physical body also demands recreation. All 
kinds of harmless amusements — golf, cricket, base- 
ball, tennis, hunting and fishing, bilHards, calis- 
thenics, and many others — are beneficial and whole- 
some. What a tame world this would be if all art, 
beauty and recreative pursuits were prohibited by 
the utilitarians! 

Fourth, it is good for us all that such things be, 
because all of them, if moderately cultivated, have a 
subtle influence upon our natures and thereby 
enhance our economic worth. Edmund Burke and 
other discoursers and writers on esthetics say that 
beauty has a physiological effect ; that the relaxation 
of the nerves by appropriate stimuli has a soothing 
effect, which is the basis of aesthetic pleasure. All 
are familiar with the dictum that good cheer pro- 
motes digestion and that worry retards the process. 
It follows that anything which calls forth a sense 
of satisfaction or pleasure promotes health. If the 



WINSOME WEALTH 161 

wearing of fine clothes, or the observance of a 
sunset or painting, creates a more pacific frame of 
mind, and if, by reason of that, a person accom- 
plishes better work, there is an apparent economic 
gain. But, as we are approaching the twilight zone 
between wealth and non-wealth, this line of thought 
will not be pursued further, however enticing it 
may be. 

It will not be questioned that the recreative pur- 
suits mentioned enhance economic efficiency by 
increasing the physical, and, consequently, the men- 
tal, health of the worker. Of course, the test of 
all efficiency methods is the actual results produced. 
That the results are nil in a tramp or non-worker 
can not be gainsaid; neither can it be questioned 
that there is no economic benefit in cases where 
other influences, voluntary or involuntary, offset all 
the gain acquired by recreative exercises. 

It will be granted that, in view of the great 
diversification of the arts and industries, growing 
out of a wider economic development, the shibbo- 
leths which are being carried from lip to lip, and 
from printed word to printed word, "Opportunities 
are getting fewer" and "Men are being made into 
machines," are proven false. Never in the history 
of the world have there been such opportunities for 
people of the most diverse talents as there are 
to-day, whether that talent be small or great. As 
regards the second fallacy, the ridiculous ludicrous- 
ness of it will be apparent when we stop to consider 
what kind of a talent or quality of worth in man 
can be imitated or replaced by a machine. A labor- 
saving device can only perform the most mechan- 



162 THE CREATION OF WEALTH 

ical forms of labor, and, therefore, it is the 
"bitingest" of sarcasms to say that a man is robbed 
of his personaHty by these machines. What are the 
extraordinary inspirational elements involved in the 
making of a pair of shoes or pants, or in making 
a tin can or a tin pan? 

In fact, is not the contrary of the statement 
true? — that these mechanical devices set free the 
niind of man, and permit it to roam at will on 
earth or among the clouds. The erroneous and 
erratic idea that the introduction of labor-saving 
machinery tends to put man on the same level and 
to deaden his intellect, is disproven by the actual 
conditions and occurrences in modern industrial life. 

Having considered some of the forms of "win- 
some" wealth, as created by man, let us turn our 
attention to those found in nature. Before doing 
so, it would be well to note that there are forms 
of wealth partaking both of the qualities of dynamic 
and national wealth. We refer to the ruins and 
other archseological attractions to be found in the 
Old World — in Rome, in Greece, in Egypt and in 
western Asia. These forms of wealth can not be 
said to be exclusively dynamic, for they are but 
the relics of once proud races; but it may be said 
that the attractive elements embodied in them are 
composites of man-made and nature-made wealth. 
Father Time and his able assistants, fire, wind, frost 
and water, have supplemented man in creating these 
ruins, which attract millions in wealth. 

Other attractive forms of wealth which combine, 
in some degree, both the national and dynamic 
forms, are cities with their beautiful natural sur- 



WINSOME WEALTH 163 

foundings and great architectural wonders, such as 
are found in Paris, London, Milan, Constantinople, 
Petrograd, and many other places. 

We now come to the pure national "winsome" 
forms of wealth. Among these are nature's works 
of grandeur, sublimity and beauty — the mountains, 
the lake, canyons, rivers, glaciers, forests and a 
great variety of flora and fauna. The same rule 
applies to these forms of potential wealth as to all 
others; namely, they constitute wealth when they 
produce wealth. It is necessary that the creative 
element of mind enter into the alchemic crucible 
before these attractions can be transmuted into gold. 
These natural beauties and wonders must be ren- 
dered accessible to the public — by means of rail- 
roads, navigable waterways, trolleys or automobile 
roads — before an economic benefit can accrue. 
Prior to the days of rapid transportation, the eco- 
nomic benefits derived from these forms of national 
wealth were inconsiderable, but at the present time 
hundreds of millions are expended by tourists in 
viewing them. 

Enos A. Mills, writing in the Saturday Evening 
Post, says: "Last year [1912] Europe did a travel 
business of five hundred million dollars; three hun- 
dred and fifty millions of this were spent by Amer- 
icans. America has scenic resources far superior to 
those of Europe. Such is the varied and striking 
nature of our scenery and such is the nature of the 
traveler that we have but to exploit these resources, 
and add accessibility and entertainment to them, to 
have a more productive travel industry than that of 
Europe. 



164 THE CREATION OF WEALTH 

"Switzerland is an excellent illustration in this 
connection. It had an array of scenery. This 
scenery was made pleasantly accessible by means 
of good roads. The traveler came. He was gra- 
ciously received and comfortably entertained. The 
following year he returned, accompanied by a num- 
ber of friends. Thus, in a few years, Switzerland, 
with an area of only fifteen thousand square miles, 
by exploiting its scenery, built up a travel industry 
that brings it $200,000,000 annually. 

"In the nature of things, the United States 
should have a travel industry of vast economic 
importance. We have numerous and extensive 
scenic areas of unexcelled attractiveness, together 
with a majority of the world's greatest scenic won- 
ders and wonderlands. All these, too, repose in a 
climate that is hospitable and refreshing. Our 
established scenic reservations, or those which may 
hereafter be set aside, are destined to become the 
basis of our large scenic industry. These reserva- 
tions embrace thirteen national parks and twenty- 
eight national monuments." 

The writer gives a list of these reservations and 
then continues : "Here is a splendid array of 
nature's masterpieces to lure and reward the trav- 
eler. In mountain peaks there are Grand Teton, 
Long's Peak, Mount Whitney and Mount Rainier; 
in canyons, the vast Grand Canyon and the bril- 
liantly colored Yellowstone; in gorges, that peerless 
pair, the Yosemite and the Hetch-Hetchy ; in trees, 
the unrivaled sequoias and many matchless primeval 
forests ; in rivers, few on earth are enriched with 
scenes equal to those between which rolls the 



WINSOME WEALTH 165 

Columbia; in petrified forests, those in Arizona, 
Yellowstone and Yosemite; in glaciers, the Black- 
foot, ;;he Nisqually and the Arapahoe; in medicinal 
springs, there is an array of flowing life-extending 
fountains; in wild flowers, the mountain wild flow- 
ers of the West are lovely; in wild animals of 
interest, the grizzly bear, the beaver and the moun- 
tain sheep; in bird music, that which is sung by the 
thrushes and canyon wrens silences with melodious 
sweetness the other best songbirds of earth. In 
these varied attractions of our national parks we 
have ample playgrounds for all the world and the 
opportunity for a travel industry many times as 
productive as our gold and silver mines — and more 
lasting, too, than they." 

The president of the Bank of Japan, K. Taka- 
hashi, is quoted by Clement in his "Handbook of 
Modern Japan," as saying: "Japan is especially 
favored by nature with beauty and picturesqueness 
of scenery, and healthful climate, and has appropri- 
ately been called the 'Paradise of the East.' We 
will turn this country into a grand park of nations, 
and draw pleasure-seekers from all parts of the 
world. We shall build magnificent hotels and estab- 
lish excellent clubs, in most splendid style, to receive 
the royal visitors of Europe and the millionaires of 
America." The author adds: "And while the objec- 
tion has been raised that this is not a very lofty 
role for Japan, it is claimed that it is seen to be 
about the role that France, the great nation of 
artists, is content to play in Europe — making herself 
infinitely beautiful and infinitely charming." 

In view of the fact that other nations are recog- 



166 THE CREATION OF WEALTH 

nizing the economic value of national forms of 
wealth, it behooves the United States to turn her 
attention to this vast mine of beauteous wealth in 
order that she may not be "left at the post" by rival 
countries. 



IX. 

Distribution or Opportunity? 

Much has been written in recent years concern- 
ing the unequal distribution of wealth, and to 
remedy this supposed inequality all sorts of pana- 
ceas have been prescribed, ranging from rank con- 
fiscation to slow methods of extirpation by cumu- 
lative taxation processes. This agitation has 
progressed so far as to involve the seats of the 
mighty, or near mighty. It is not necessary to men- 
tion names, as all can recall notable recent instances 
of more or less irresponsible ebullition. 

In the consideration of this question, two or 
three fundamental propositions — generally over- 
looked — will be discussed. The first proposition 
pertains to the thesis of this treatise, the creative 
aspect of wealth. The second proposition has refer- 
ence to the necessity that capitalists make use of 
their surplus wealth, and that, in making use of it, 
they necessarily create opportunities for labor. The 
third proposition grows out of the first two ; namely, 
opportunity is preferable to charity. 

In the discussion of economic questions, the 
word "opportunity" should displace "distribution." 
All can agree on the proposition that to labor is 
man's most treasured boon, and it logically follows 
that anything which affords him such an oppor- 
tunity is of more worth than the distribution of the 

167 



168 THE CREATION OF WEALTH 

so-called "surplus" wealth. For example, it is 
better that the entrepreneur devote his non-working 
capital to new projects, than to divide it among 
those who may possess more of this world's goods 
than others. It is also plain that the more oppor- 
tunities offered, the greater will be the demand for 
labor, and, following the law of supply and demand, 
wages will thereby be enhanced. 

The process of distribution is as if the farmer 
should go into the orchard and pluck the green 
fruit for division among those who have less, or as 
if the gardener should pick the flowers in the bud 
for the same purpose. Perhaps the analogy would 
be more complete if the farmer or planter should 
dig up his fruit-trees — say orange — and give them 
to residents of a northern clime, or as if the florist 
should take his flowers out of the hothouse in mid- 
winter and bestow them upon those who desire to 
plant them in their gardens. In these cases, as in 
the distribution of wealth, are found dissipation 
and destruction of intelligent concentration of pro- 
ductive capital. 

That capital is required in the conduct of indus- 
trial enterprises can not be denied. Neither can 
it be denied that, in general, this capital is in the 
hands of the "doers" of the world. It is not to be 
inferred that this capital is always possessed by the 
doers or captains of industry. There are some idle 
capitalists, but this need not concern any one as 
long as their money is v/orking. These capitalists 
are continually looking for new places for invest- 
ment, for new projects to promote, and to accom- 
plish these purposes the capital is placed in the 



DISTRIBUTION OR OPPORTUNITY? 169 

hands of the creative forces, the entrepreneurs of 
the economic world. 

A tendency has recently developed in magazine 
and newspaper writers of wide reputation to advo- 
cate the confiscation of property of the idle rich. 
This propaganda is as fallacious as that of the 
socialist, who v/ould confiscate all property. All 
should rejoice in the wealth of the wealthy — if 
acquired honestly — for they can not eat it, and they 
will not (literally) burn it; therefore, they must 
spend it or invest it, and in so doing provide sus- 
tenance and opportunities for labor to the less 
fortunate. 

Then, again, the more benevolently inclined of 
these capitalists are in the habit of donating large 
sums to philanthropies of various kinds — educa- 
tional, religious, charitable and general social serv- 
ice. If their wealth is taken away from them, who 
will contribute to these benevolent causes? 

It is axiomatic that the more complex the civil- 
ization, the greater the opportunities for the laborer. 
Such opportunities, for example, in a distinctively 
agricultural community are very limited. If only 
the necessities of life are produced, economic activi- 
ties are placed on a level with those of such coun- 
tries as China or the South Sea Islands. But, some 
one may ask, why should we desire, or labor for, 
more than the necessaries of life? Wherefore all 
this struggle for the non-utilities — the artistic and 
the hedonistic, the dramatic and beautiful? Well, 
does such an one presume to criticize Mother 
Nature? Does she not revel in these things, and 
is she not the inspiration of all arts? 



170 THE CREATION OF WEALTH 

There is another argument in these latter days 
equally as forcible for the dynamic forms of wealth. 
We refer to the introduction of labor-saving 
machinery and other efficiency devices in agricul- 
ture and in the manufactures. The installation of 
this machinery and of these land-augmenting proc- 
esses in agriculture creates a condition differing 
only in degree to the southern clime referred to 
under "Capital," where but little labor is required 
to sustain life. In each case the actual labor 
involved, as compared with the results, is insignif- 
icant; and it can readily be seen that economic 
conditions gradually tend toward the minimizing of 
physical labor, with a correlative augmentation of 
mental labor. 

And all of this forms a potent reason why econ- 
omists should modify the teachings in their text- 
books. Seligman, in his "Principles of Economics," 
makes this statement : 

"The apologists for luxury, for example, have, 
from time immemorial, sought to justify themselves 
by the plea that luxurious expenditure is beneficial 
because it affords employment to labor. The merest 
tyro in economic reasoning, however, will at once 
perceive the weakness of this hoary argument. If 
luxurious expenditure is productive simply because 
it employs labor, the accidental breaking of a win- 
dow-pane or the wanton destruction of a growing 
crop is also productive in so far as it will require 
labor to repair the damage. The fallacy clearly 
consists in the assumption that wealth spent in 
luxurious outlay would not otherwise be devoted to 
production. Obviously, however, if the spendthrift 



DISTRIBUTION OR OPPORTUNITY? 171 

chooses not to waste his funds, they will take the 
form of purchase of securities, in investment in 
some enterprise or of a cash balance in bank; and 
in each case they will be devoted to production and 
thus give employment to labor." 

Waiving the writer's inability to distinguish 
between the so-called luxuries and destruction, he 
is begging the question when he assumes that the 
surplus money will be invested in some productive 
enterprise. It might be hoarded up. Then he 
would have to be very careful v/hat kind of an 
enterprise he invested his money in, for nearly all 
such are devoted to the manufacture of some of 
the forms of the so-called luxuries. Even textile 
houses make all kinds of gaudy and artistic stuff 
on which the orthodox economist would place a 
ban. The unanswerable reply to the argument is, 
that civilization is made up of a superposition of 
these luxuries, the dynamic forms of wealth. It is 
impossible to differentiate between the various 
forms of luxuries, except in a manner hereafter 
explained. 

In answer to the argument relative to the broken 
window and damaged crops, it is sufficient to state 
that both are productive forces if they result in a 
more equable distribution of wealth, affording 
employment to those who have less. If the owner 
of the house with the broken window is a man of 
wealth, surely it harms no one, but, on the con- 
trary, benefits the glass manufacturer and his 
employees. Windows are fragile, and their ultimate 
destruction is as certain as that an orange will be 
consumed by man, animal or the elements. 



172 THE CREATION OF WEALTH 

Another argument in favor of the "destruction" 
of property is that insurance companies are founded 
upon such destructions, yet they have been one of 
the most productive forces of a nation. The com- 
paratively small amounts collected from those 
insured have become millions in the hands of the 
insurance companies, which have been loaned to the 
captains of industry and in that manner have aided 
and encouraged the development of the resources 
of a country. It is therefore apparent that a loss 
to an individual does not necessarily signify a loss 
to the nation as a whole. 

The economic exceptions in the so-called luxu- 
ries already referred to comprise those hedonistic 
or deleterious practices and pursuits which generally 
result in the deterioration of man, mentally and 
physically. Classed with these are the manufacture, 
sale and use of intoxicants, opium, cigarettes and 
other harmful commodities which destroy the eco- 
nomic, as well as the physical and moral, worth of 
the individual. While it is true that all of these 
things, at first-hand, have an economic value, yet 
their ultimate effect is so detrimental and destruct- 
ive that the economic strength of a nation becomes 
sapped. Who can estimate the loss to a nation, for 
example, should such a creative man as Edison have 
fallen a victim to one or more of these blights? 

If, in the economic world, however, wealth is 
the satisfaction of a desire, subjectively, or money 
or its equivalent, objectively, the question of benefits 
in a business transaction can not be logically con- 
sidered. No matter if the commodity or thing pur- 
chased be as good or better than represented, a 



DISTRIBUTION OR OPPORTUNITY? 173 

natural or economic law may intervene to render it 
valueless or worse. For instance, food may be 
purchased of the rarest and best quality, but if the 
purchaser eats too much or partakes of something 
he should not have eaten, he will not only derive 
no benefits therefrom, but, on the contrary, may 
become ill and suffer loss in time, money and peace 
of mind. 

Again, if property or a commercial business is 
purchased and a panic ensues, the purchase may be 
rendered worthless. A horse may be bought, and 
the deal may be fair and just, but the animal may 
immediately suffer accident and die. It follows that 
the only thing that matters is whether misrepresen- 
tations have been made by one party or the other 
of a transaction. The purchaser may derive no 
benefits from a trade, and it may have been plain 
to an impartial observer that he could not possibly 
have derived any benefits, but if the thing purchased 
is something which he desired, there can be no 
economic fraud. It is evident, however, that the 
money received by the seller is of as much value 
to him as if the thing sold was of real worth to the 
purchaser. In short, a one-sided transaction, as in 
the case of the broken window, may be of great 
benefit. The only thing to be considered is whether 
a greater economic boon would have resulted had 
there been no destruction of property. 

It is readily conceivable how the destruction of 
old, time-worn or unprofitable buildings by fire, 
cyclones or earthquakes may result in economic 
benefit. In cases where unsightly and unremuner- 
ative buildings are destroyed, while there may be a 



174 THE CREATION OF WEALTH 

nominal loss, yet if out of the ashes arise new and 
more attractive edifices it will be admitted that the 
final result is an economic boon. Such was the 
result in the great historic fires of the country, in 
Chicago and Baltimore, and in the disastrous earth- 
quake and fire that visited San Francisco. 

Paradoxical as it may seem, there is a sort of 
destruction that is, in reality, conservation. If, for 
example, a building, or a number of buildings, are 
destroyed by an earthquake, and if out of the ruins 
spring better and stronger buildings, m.ade of con- 
crete and steel, what happens? There is a con- 
servation by conversion to other and indispensable 
uses of wood and other weak and destructible mate- 
rial of the original constructions, and there is a 
conservation of forests, which will be preserved for 
essential manufactures and practical uses. 

In olden times, poplar, oak, hickory and even 
walnut timber was used for fuel and in the con- 
struction of fences and the like. If some natural 
catastrophe, a fire or a cyclone, destroyed large 
quantities of standing timber, causing a scarcity in 
one or more localities, it would have a tendency to 
check the wasteful use of such material in other 
localities. 

Harrington Emerson, . in an address on the 
"Opportunity of Labor Under Scientific Manage- 
ment," as reported in a volume entitled "Tuck 
School Conference on Scientific Management," says 
(p. 91): 

"In the Seward Peninsula, Alaska, were many 
Eskimos. They had lived there many thousand 
years. They barely subsisted. There was no gain 



DISTRIBUTION OR OPPORTUNITY? 175 

in wealth from generation to generation; there was 
no gain in population, for occasionally, in severe 
seasons, whole settlements were wiped out by star- 
vation. Into this country came a Swedish deserter 
from a whaling-ship. He found indications of gold ; 
he staked some claims. The rush began; miners 
received $10 per day. Gamblers, saloon-keepers and 
lewd women came in great numbers. 

"There were in the elementary country four 
classes of society: (1) The abnormally intelligent 
few who had uncovered hidden wealth, gold-bearing 
rock; (2) the men who worked or contributed to 
the working of the claims; (3) an abjectly poor 
class at the bottom, the Eskimos; (4) a predatory 
class of parasites. Can it be that the poverty of the 
Eskimos was due to the wealth of the mine- 
owners ?" 

Further along Emerson says: "Before the days 
of the Norman conquests there were unusually 
degraded people in London. Their condition has 
steadily improved; never through their own efforts, 
but always through those of the enterprising few 
who went out to trade abroad, or to build up manu- 
factures at home, or to open up new coal and iron 
mines." 

Gerald Stanley Lee, in "Inspired Millionaires," 
says: "The facts seem to be coming out all about 
us that the world is not only inventing new kinds 
of machines, but, with Copernicus, Darwin, Bell, 
Lord Kelvin, Rousseau, Columbus, Lincoln, Words- 
worth, Whitman, Emerson, Edison and Marconi, it 
is slowly inventing, new kinds and sizes of men. 
There are several kinds of men with imagination 

12 



176 THE CREATION OF WEALTH 

in business. Those who invent trade conveniences 
and economies, the creative merchants, brokers, 
storekeepers. Those who invent machines and 
whose imaginations play in the laws of physics. 
Those who invent new materials and whose imag- 
inations play around the things that come out o£ 
the earth, the men who make new combinations of 
the elements, who are poets in chemistry or botany 
or mineralogy. Those who invent people. 

"The special function of the inspired millionaire, 
as he looks over the field of invention, is inventing 
people. People are the most necessary of the inven- 
tions. They make and use the others. Nearly all 
of our great millionaires were invented by some 
other millionaire who saw what was in them and 
saw how it could be combined and released and put 
in action." 

It would appear that the law of compensation 
as applied to economics is more than compensatory. 
People living in the twentieth century are heirs to 
all the discoveries, inventions and economic benefits 
produced by men of enterprise in the nineteenth and 
preceding centuries. If the second efficiency method 
(labor-saving devices) causes thousands to be 
thrown out of employment, it is only that they may 
be caught up by the great creative forces (efficiency 
method number 1) and lifted to higher and better 
stations. 

Under "Winsome Wealth" it was shown how 
the artists, authors, sculptors, architects, and a host 
of other mental workers, find a wider and more 
remunerative field for their productions as economic 
life becomes more and more complex. So under 



DISTRIBUTION OR OPPORTUNITY? 177 

expanded industrialism greater opportunities are 
afforded to the class of men represented by mana- 
gers, and various kinds of experts, chemists, invent- 
ors, mechanicians, bookkeepers, clerks, engineers, 
foremen, chauffeurs, and so on to the end of the 
chapter — not forgetting the farmer. 

A writer in the Saturday Evening Post says, 
relative to wealth distribution : "In the last ten years 
we have had the most phenomenal prosperity ever 
known here or anywhere else ; and we have fol- 
lowed the example of the children of Israel and 
kicked, until not only have we almost convinced our- 
selves that we are suffering unusual hardships, but 
have caused the people of the Old World to wonder 
if at last their predictions are not coming true, that 
the republic is about to crumble under dissatisfac- 
tion and division." The writer states that he was 
told at the Census Offfce that our total wealth 
to-day is estimated at one hundred and fifty billion 
dollars ; it was eighty-eight billion in 1900, sixty- 
five billion in 1890, and only sixteen billion in 1860. 

"This total wealth has not been gathered into 
the hands of the Money Trust or tariff barons ; nor 
has it been centered in Wall Street. It is just 
where wealth has always been — among the people 
who go to the soil, the mine and the factory, and 
produce wealth. The value of farms and farm 
property not only doubled in the last ten years, but 
it has increased fivefold in the last forty years, for 
this farm wealth was only eight billion dollars in 
1870 and it is now almost as great as the total 
wealth of the country in 1880." 

All of these considerations are corroborative of 



178 THE CREATION OF WEALTH 

our contention that the wealth of all classes is inter- 
woven with the wealth of any particular class. Or, 
to state it in another way, creative men develop 
resources, discoveries and inventions; to do this 
they employ labor; to employ labor means to cir- 
culate money, and the more money there is in cir- 
culation, the greater the opportunity to acquire some 
of it. 



X. 

Trusts and Special Privileges. 

In the discussion of Trusts — which is a peren- 
nial theme — a popular practice prevails of placing 
them in two classes — the bad and the good, or the 
black and the white. To be exact, however, this 
statement must be modified, for there are many 
who would place them all in the first-named class, 
and these asseverate that, following the character- 
ization of the Indian, "a good trust is a dead trust." 

Now, we maintain that these latter have the 
thing reversed, and what they should say is, "A 
good trust is a 'live' trust." By a live trust is 
meant one which is alive — alive in spirit and action ; 
alive to the economic needs of a people or country, 
and alive in visions and plans for their fulfillment. 
In brief, a good trust is one backed and forwarded 
by creative men — men who hold their positions by 
the force of efficiency, rather than the non-force of 
"dead" mass. 

In the popular conception, a bad trust is a big 
trust or "monopoly," one which controls the greater 
part of the output of the products manufactured. 
Such a trust may or may not be bad, depending, of 
course, on whether it uses its power to maintain 
unfair prices or to unfairly restrain trade. But, on 
the other hand, if it utilizes its power in developing 
the industrial and commercial life of a nation, by 

179 



180 THE CREATION OF WEALTH 

the introduction of economies and methods of 
efficiency, it must be classed among the good trusts. 
It must be remembered, however, that a trust may- 
become so large and unwieldy that it fails to be 
effective and falls of its own weight. 

Essentially, the only bad trust is one which 
results from throwing together or combining a lot 
of "dead" physical units, without regard to service 
or efficiency, with the aim of controlling prices and 
restraining trade. This is the "dead" trust as dis- 
tinguished from the "live" one. 

As regards monopolies and special privileges, it 
would prove interesting if some of the decriers of 
these supposed evils would define the terms, and 
then apply the definitions to their own individual 
cases. Who are the monopolists? The word 
"monopolize" is defined as meaning "to obtain or 
assume exclusive possession or control of." In the 
light of this definition, and in view of the fact that 
two persons can not occupy the same space or posi- 
tion at the same time, are not all of us who hold 
positions monopolists or the beneficiaries of special 
privilege, if you please? So long as there are idle 
persons or more desirable positions than others, the 
less fortunate must look upon all persons holding 
positions, or better positions, or possessing lands or 
industries, monopolists. All farmers, tradesmen, 
professional men, and artists of various kinds, are 
monopolists, as are all office-holders, policemen, 
selectmen, mayors, sherifi^s, governors, senators, and 
even the President. The latter not only monopo- 
lizes the office for four or more years, but, in some 
instances, attempts to monopolize the functions of 



TRUSTS AND SPECIAL PRIVILEGES 181 

officials of other branches of the Government. 
There is a certain former President who not only 
monopolized the office for two terms, but dictated 
his successor, and then attempted to monopolize it 
again — and he needs watching yet. 

Thus we see that there are monopolists, and, 
again, monopolists, and that in the last analysis all 
of us are monopolists — at any rate, as refers to our 
homes, wives and children. Perhaps this last state- 
ment should be modified. Some of us are monopo- 
lists only so far as it applies to us, and collectivists, 
or socialists, or anarchists, as applied to others. 
And is not this sense of selfishness, or envy, at the 
root of all, or the greater part, of this anti-trust and 
anti-what-not agitation ? 

The Mexicans, for example, seem to be the 
original anti-monopolists or anti-special privilegists, 
for does it not keep them busy chasing each other 
out of occupations, possessions and offices? The 
trouble all comes about by two or more persons try- 
ing to occupy the same space or position at the 
same time. In physics, this is considered an impos- 
sibility — in politics, everything is possible, appar- 
ently. 

In its widest sense, a monopolist is any person 
who "monopolizes" a "job" to the exclusion of all 
others, and, as all such persons are supposed to hold 
their positions on merit, the monopolists are the 
efficient. This proposition holds true only in a 
free country — a country in which every man is 
unshackled and unbound, and in which the rule of 
reason prevails over the fetish of force or special 
privilege. And, if a close observation is made of 



182 THE CREATION OF WEALTH 

economic conditions prevailing in the United States 
to-day, it will be seen that, generally speaking, it is 
the efficient and the men of merit who hold the 
responsible positions in the management of the cor- 
porations and trusts, as well as in the smaller indus- 
trial activities. The great majority of the captains 
of industry, the "doers," have risen from the ranks, 
or, at least, have proven their capacity to manage 
big business affairs. This must necessarily be so 
for a selfish reason, if no other, for the proprietors, 
the owners and directors of big business are for- 
ever endeavoring to declare larger dividends, and 
to accomplish this they must employ the most 
efficient men and adopt the most efficient means 
available. 

To condense to a phrase, all monopoly may be 
defined as a reward for service or merit, whether 
it be conferred by patent rights, public utility fran- 
chises, railroad rights of way and terminals, bank 
or corporation charters, land grants, ferry and 
power franchises or by contract, public or private. 
And if, as some would contend, these men of ability 
are so numerous, why is it that so many cities are 
seeking the services of Colonel Goethals, the builder 
of the Panama Canal? 

What, then, are some of the efficiency methods 
embodied in the so-called trusts or monopolies? 
That the first (the creative) of these methods is to 
be found in these organizations can not be ques- 
tioned. All men who do things have an ideal, a 
general plan of the work desired to be accomplished. 
This plan includes the thing to be done and the 
ways and means of accomplishing it, and this gen- 



TRUSTS AND SPECIAL PRIVILEGES 18.3 

eral plan or vision forms a no small part of the 
capitalization value of the enterprise. This idea 
was elaborated under the chapter entitled "The 
Entrepreneur." 

The consolidation of two or more business enter- 
prises results in the attainment of economics in the 
conduct of the newly formed corporation; first, by 
reducing the amount of capital required. This sav- 
ing is embodied in efficiency method number 3 
(material-saving). The consolidation also enables 
the management to reduce the working force — 
efficiency method number 2 (labor-saving). It also 
eliminates "v/aste" or "disease" in operation by 
removing disastrous competition (efficiency method 
number 12 — external obstructions). This concen- 
tration of capital and machinery permits cheaper 
and more effective distribution and also the utiliza- 
tion of by-products (efficiency m.ethod number 7 — : 
material-augmenting) . 

This centralization further permits of experi- 
mentation along the lines of improving the product 
(number l^ — manufacture of a better article). 
Neither will it be denied that this concentration of 
capital permits a wider promotion of the business, 
extension of home and foreign markets (efficiency 
method number 13 — business augmentation). 

In an interview in the New York Sun, Mr. 
Charles R. Flint, in referring to general industrial 
conditions in the fall of 1913, said: "Comparing the 
last five years with the five years preceding the 
industrial consolidations, we find that our exports 
of manufactured goods have increased nearly six 
times — namely, to six billion dollars — and it is a 



184 THE CREATION OF WEALTH 

fortunate fact for us that, of our total exports of 
manufactured goods, over seventy per cent, are sup- 
plied by individual consolidations. This is due not 
only to the fact that they can produce at a lower 
cost than can competing companies, but also to the 
fact that they have been able to organize depart- 
ments for securing foreign orders, and, in some 
cases, as in the case of the steel company, they are 
carrying stocks of goods in foreign markets in 
order to facilitate prompt delivery." 

And it is this extension of markets into foreign 
countries that forms the most formidable task of 
the entrepreneur of the twentieth century. Compe- 
tition is becoming keener with the advancing years, 
and England, Germany, France and other European 
as well as South American countries, are strenu- 
ously contending for expanding markets for their 
products. Instead of hindering this great work, 
which confers benefits upon all citizens by reason 
of the balance of trade, the Government should 
exercise all its powers to encourage our captains of 
industry in opening up new commercial fields. 

The entrepreneurs, in building up foreign trade, 
do not confine themselves to subjective methods of 
promotion altogether. In numerous instances they 
have created demands for manufactured goods or 
other products among the citizens of other coun- 
tries, where no such demand existed. This was true 
of the Standard Oil Company when it first 
attempted to find a market for kerosene and by- 
products in China and other countries. Then, in 
other instances, our capitalists sometimes promote 
enterprises, railroads, trolley lines, etc., in foreign 



TRUSTS AND SPECIAL PRIVILEGES 185 

lands, and in this way provide a market for our 
products. 

Some may contend that this last method repre- 
sents an unsound economic principle ; that all of our 
surplus money should be invested at home. But 
is it not a fact that anything which increases the 
wealth of undeveloped foreign countries tends to 
promote commerce? Indirectly, this foreign invest- 
ment benefits us, because it increases production, 
and the laborers employed in this production 
increase the sum total of the consumers of the 
world. Again, money used in educating and rais- 
ing the standard of living of semi-civilized people 
ultimately creates wealth in various forms, as rep- 
resented in demands for products of civilization. 
How long, for example, would it take a manufac- 
turer to get rich selling works of art, treatises on 
higher mathematics or spectroscopes to the inhabi- 
tants of Timbuctoo, unless some effort be made to 
educate them? 

As an example of what education can do sub- 
jectively to a people, we quote the following from 
"A Handbook of Modern Japan," showing the 
national development in thirty years, ending in 1901 : 

"In 1872 the population was 33,210,000; in 1902, 
about 45,000,000, showing an increase slightly in 
excess of thirty- three and one-third per cent. The 
trade during that period increased from $43,204,462 
to $508,166,187, an increase of over one thousand 
per cent. 

"Foreign trade exports increased from $17,026,- 
647 to $252,349,542, a remarkable increase of 
fifteen hundred per cent. Imports increased from 



186 THE CREATION OF WEALTH 

$26,174,814 to $255,816,644, nearly one thousand 
per cent. Yet there are those who say that educa- 
tion and brams are non-productive!" 

What can be done to curb these so-called trusts 
or to minimize the evils incident to their organiza- 
tion and conduct? Much has been attempted along 
this line by various methods, publicity, regulatory 
and penal, but none of these methods have proven 
altogether successful, from an economic viewpoint. 
All attempts to regulate or dissolve trusts will prove 
more or less abortive for at least two reasons. 
First, for the reason that the industrial and com- 
mercial life of the nation and the world has become 
so big and complex that no commission can deter- 
mine what should or should not be done under all 
circumstances. The railroads, as an example, are 
to-day on a stand, if, indeed, they be not retrogra- 
ding, because of restrictive legislation and regulative 
measures. Who are the omniscient ones that can 
tell these railroad promoters what to do under all 
conditions? Where is the man who can dictate to 
a Harriman or a Hill, and tell him where to estab- 
lish his lines or to make his extensions? Then, if 
the railroads are to be restricted in their profits to 
a certain per cent, of earnings on their capitaliza- 
tion, who will build the new lines or make the neces- 
sary extensions and improvements? 

The second reason why trust legislation will 
prove more or less futile is that no law or book 
of laws can prevent captains of industry from 
secretly agreeing among themselves, in the event 
that their corporations are dissolved by decrees of 
court, to continue the operations as before, even 



TRUSTS AND SPECIAL PRIVILEGES 187 

though, to all outward appearance, the trusts have 
been resolved into their constituent companies. 

When all has been said, perhaps it will be dis- 
covered that the Supreme Court struck the keynote 
in the solution of the trust problem when it wrote 
the word "reasonable" into the Sherman act. Rea- 
son must be exercised on both sides — by the public 
as well as the corporations — if free industrialism is 
to endure. If the trusts are not reasonable, they 
will bring down on their heads the vindictive wrath 
of an outraged public, and if the public is not 
reasonable, they will, by their activities, paralyze 
the industrial animal which feeds us — sometimes 
with golden eggs. 

The answer to the trust problem, therefore, 
would seem to lie in the two words — ^publicity and 
reason. If all the essential facts are known, and 
if the rule of reason is permitted to prevail, the 
great economic and social laws of supply and 
demand, of action and reaction, of reward and pun- 
ishment, will adjust themselves to the eye and ear 
of justice, for, with Cicero, we must believe that 
"Natura juris fons." 



XL 

Physical Valuation and Watered Stock. 

If, as we have endeavored to prove, land, labor 
and capital do not produce all the wealth of a 
nation, a number of towering- structures, founded 
upon the accepted theory of economics, must totter 
and fall. Among these are propagandas based upon 
physical valuation, and watered-stock theories and 
all forms of socialism, syndicalism and singletaxism. 
These latter doctrines will be treated under separate 
chapters. 

What would be the effect of the enforcement of 
physical valuation of corporate property as a basis 
for dividends? It will readily be agreed that, after 
a careful perusal of the principles enunciated herein, 
the immediate effect would be both disastrous and 
unjust. It was shown in the chapter on "The Entre- 
preneur" that the value of a projected enterprise 
does not lie in the amount expended in labor and 
material in its construction. What was the physical 
valuation of the "streak of rust and right of way" 
of the Union Pacific when Harriman assumed con- 
trol, or the right of way (without the "rust") of 
the Great Northern when James J. Hill financed it? 
And what is represented in the difference in value 
of those roads at the times specified, and now ? And 
who is hurt by the transactions? It was explained 
in that chapter how these men created wealth in all 

188 



PHYSICAL VALUATION 189 

of the fifteen efficiency methods, and that, in accom- 
plishing this, they not only harmed no one, but, on 
the contrary, helped thousands — farmers, tradesmen, 
stockholders — in short, all who came within the 
magic circle of their economic activities. 

When the full portent of the value of mind, or 
the idea as a source of wealth, is recognized, the 
advocacy of physical valuation, as a means to 
restrict profits, will be considered a crime. If the 
greater part of the so-called "water" in a stock is 
really ideaistic wealth, an effort to "squeeze" out the 
water would, in all probability, result in the strangu- 
lation of the industry. If the water is, in reality, 
brains, or brain products, it is clear the elimination 
of the water would be equivalent to eliminating 
creative energy, with a resultant decline and decay 
of the enterprise. 

It would be putting a premium on inefficiency if 
railroads were compelled to limit their earnings to 
a sum equal to a stipulated per cent, on the physical 
valuation of the road. What does it matter whether 
the extra profits arising from creative energy are 
divided among the shareholders as dividends or 
applied to the capital stock? What does it concern 
any one, in other words, whether a given corpora- 
tion declares dividends of thirty per cent, on a capi- 
talization at its physical value, or dividends of ten 
per cent, on treble its valuation? In regard to 
public service corporations, however, an attempt 
should be made to determine whether the rates are 
reasonable and just. 

Turning to industrial life, Vv^hat is the physical 
valuation of Marshall Field & Co., and what is the 



190 THE CREATION OF WEALTH 

relative proportion between the sum invested and 
the annual earnings? What is the physical valua- 
tion of the E. C. Simmons Hardware Company, of 
St. Louis, which does a yearly business of $20,000,- 
000? Or what is the physical valuation of the 
Sears-Roebuck Company, the Ford Motor Company 
or the John Wanamaker Company? All of these 
companies, and thousands of others, have, of course, 
large amounts invested, but it is common knowledge 
that the dividends declared are enormously large. 

How can the rewards of efficiency be limited? 
In New Rochelle, N. Y., there resides an aged man 
who is engaged in the manufacture of scales and 
balances. Some of these are used in analytical and 
assay work, and are so delicately adjusted that a 
sensitiveness of l-400th of a milligram is obtained. 
A milligram is one-thousandth part of a grain, which 
would mean that the balances detect substances 
differing in weight to l-400,000th part of a grain. 
That is, they will weigh a lead-pencil mark. We do 
not know what the physical valuation of his plant, 
which occupies one small building, is, but we know 
that his profits are great. 

The physical valuation of the Edison Electric 
Company or the Westinghouse Company is great, 
but what is the physical valuation of the mind of 
an Edison or a Westinghouse, the original sources 
of all this wealth? 

Of course it is recognized that the physical val- 
uation theory is applied particularly to public utili- 
ties or quasi-public utilities, but do not the elements 
of creative wealth enter into these as largely as into 
an ordinary industrial enterprise? It can not be 



PHYSICAL VALUATION 191 

denied that abuses have accompanied the conduct 
of many of these utiHties, and there is no question 
that there should be a certain amount of govern- 
mental regulation. But how far should a city, state 
or nation go in this direction ? Should they insist 
upon a strict physical valuation and limit the profits 
to a certain per cent.? We believe that these meth- 
ods are both unwise and unjust. They might be 
adapted to particular situations to a certain degree. 
In the conduct of a public utility — for example, a 
street railway — a number of issues must be consid- 
ered. The public corporation has no right to declare 
dividends under a policy of total disregard for 
public convenience and comfort. The public has a 
right to demand adequate and satisfactory service, 
and if it is found, upon investigation, that the man- 
agement of the public service corporation has put 
dividend-paying above service, a halt should be 
called by those in authority. 

It can not be gainsaid that the conduct of a 
public utility corporation requires a high quality of 
mind. The men behind these corporations must 
possess all the qualities of the successful entre- 
preneur and must utilize all of the industrial 
efficiency methods available. We have in mind one 
such person, a president of a heat, light and trac- 
tion company, who, by close and intelligent appli- 
cation, built up a discredited and losing plant to a 
magnificent and prosperous corporation. But in so 
doing he wrecked his health. By working about 
eighteen hours a day, he reduced the cost of utilities 
and made the stock pay big dividends ; increased the 

value, if not the physical valuation of the plant, at 
13 



192 THE CREATION OF WEALTH 

the expense of his own physical value. And, after 
all has been said, any sort of a big enterprise will 
not run of its own accord. It needs some strong, 
resourceful man at its head, who will sacrifice all 
interests to the consummation of the work in hand. 

There is another very important phase of all 
propagandas looking to the governmental control or 
ownership of public utilities. We refer to the risks 
assumed. These risks include the great destructive 
forces of nature — fire, storms, floods, tornadoes, 
earthquakes — and also risks growing out of compe- 
tition, labor disputes and other human elements, 
including war.* If everything is to be put on a 
physical basis, who is to pay for all of these losses? 
It must be plain to all that big allowances must be 
made for all these destructive elements. 

And instances of this sort of elemental destruc- 
tion are occurring almost daily. As we write, the 



•Since writing this chapter, one of the greatest wars of all times 
has broken out in Europe. It is not our purpose to dwell on the 
maniiold horrors of this conflict, but simply to call attention to the 
stupendous and widespread economic effect, and how all the lesser 
efficiency methods shrink when compared with this violation of the 
fifteenth efficiency method, the melioration of economic environments. 
Values heretofore considered unassailable have been riddled by "imag- 
inary" and "psychological" bullets, counterfeits of the realities fired 
on the battlefield. But these economic bullets are no less real because 
of their invisibleness or immateriality. 

Then, it must be remembered that back of all is the moral equa- 
tion (character), the lack of which among the nations of the world 
has brought on this awful cataclysm. And how senseless is it all! — 
even from an economic point of view. If it be the part of a wise 
government to encourage trade with other nations, it would appear a 
futile task to acquire their goodwill by the use of shell and shrapnel. 
If the war is for territorial aggrandizement, the nations which win 
will lose, for what will it profit them if they acquire a few square 
miles of territory, if thereby they lose the trade of the nations with 
whom they were at war, as well as other more or less sympathetic 
nations? 



PHYSICAL VALUATION 193 

report comes that floods have destroyed hundreds of 
thousands of dollars' worth of property in Texas. 
It is not necessary to call attention to such great 
calamities as the Galveston flood, the San Francisco 
earthquake and the devastating floods in Ohio and 
the Central West in the early part of 1913. 

The Minnesota courts recently decided that a 
State can tax a railroad down to a certain profit. It 
follows that the more the management of the road 
can reduce expenses by efficiency methods the more 
the State can tax it. This affords a splendid induce- 
ment for efficiency! If the management of a public 
service corporation, by clever advertising and meth- 
ods of promotion, attracts double the amount of 
traffic as his competitor, should he be deprived of 
the results of his efforts and ingenuity? 

Watered stock stands in the same relation to 
big business as goodwill does to small enterprises. 
Under the "Entrepreneur" chapter it was shown 
that goodwill is a compound of several factors, in 
which the creative element of mind predominated. 
Why should a money value be placed on goodwill 
and withheld from watered stock? As the Japanese 
schoolboy would say, "We ask to know." The law 
that water seeks its level applies to economics as 
well as to hydraulics, and it follows that if there 
is too much water in a stock, the price "level" will 
fluctuate accordingly. 



XII. 

Socialism. 

One of the strange, if not unaccounted-for, 
phenomena of the times is the rapid growth of the 
principles of socialism throughout the world. That 
this should be, despite the signal failure of all 
attempts to establish socialist colonies and states, is 
all the more remarkable. The press, newspapers, 
magazines and books are freely discussing the prop- 
aganda in all of its phases, and in consequence the 
miasmatic doctrine is threatening to submerge the 
world. 

Until recently, the socialists have been wont to 
point to New Zealand as a shining example, suc- 
cessful and triumphant, of co-operative methods, 
but of late disastrous reports have been received 
from that socialistic colony, and a hesitancy to 
"point with pride" to this country has been observed. 

There was published in Life, in its issue of 
Nov. 13, 1913, a letter from Mr. E. A. Gowran, 
who said in part: "It was our misfortune to visit 
New Zealand last winter, and we had an oppor- 
tunity to learn something of the actual results of 
the 'advanced' and 'progressive' ( ?) methods of 
government so widely advocated these days by lead- 
pencil theorists, and we wish that those so anxious 
for all these sociahstic theories might be obliged to 
go to New Zealand to live. 

194 



SOCIALISM 195 

"The net results in New Zealand, as we saw 
them, were to place a complete embargo on all 
progress and rob the individual of all incentive to 
put forth his best efforts. True, it has placed all 
on a level; but that level is of such a low order 
that the result is disastrous to the progress and well- 
being of the country as a whole, and the condition 
of the people is such as prevailed elsewhere fifty 
years ago. In other words. New Zealand seems to 
be 'progressing' backv/ards. 

"We have visited, as tourists, nearly every coun- 
try in the world, and we were never among a people 
supposed to be civilized where living conditions 
were so crude, out of date and uncomfortable gen- 
erally for the tourist as we found them in New 
Zealand; and the people in general were the most 
crude, mediocre and backwoods lot. ... As regards 
labor conditions, after twenty years of government 
by the Labor party, and 'labor laws,' there seems to 
us to be more strikes and labor troubles generally 
than we know anything about here. 

"In New Zealand, as soon as a business becomes 
profitable and successful, the government claims it 
and takes it over, and thereafter the same business 
is conducted by the government directly, or is split 
up and sold to small holders with little or no cap- 
ital — the government furnishing the capital on long 
time and very low interest. The prosperous, suc- 
cessful man is treated as an enemy to society in 
general, and the sick, lame and lazy are petted and 
nursed to the point where the successful man finds 
himself better oflf if he drops back in the line of 
march. Consequently, 'there is nothing doing.' " 



196 THE CREATION OF WEALTH 

Socialism is not only contrary to all experience, 
but to all sound tenets of philosophy and psychology 
as well. Since the Marxian doctrine that land, labor 
and capital produce all wealth has been proven 
false, socialism hasn't a leg to stand on. Self- 
reliance, freedom to aspire, to prosecute one's ideas 
and ideals, distinguishes man from the brute. To 
destroy these qualities would be to convert him into 
a jellyfish, or, at best, half-animal and half-man. 
Under a system of government guaranteeing every 
one the satisfaction of his desires and needs, man's 
greatest friend, adversity, would be taken away 
from him. There is something higher and better 
than material prosperity. It would be a sad day 
when, by governmental interposition, all that makes 
for true success and nobility is destroyed in an 
effort to satisfy man's material wants. 

Secretary of the Treasury McAdoo, the man 
who built the Hudson River tunnel, has this to say 
anent the elements contributing to success in life: 

'T was brought up in Georgia in the path of 
General Sherman's famous march to the sea. As 
Henry Grady once remarked, 'General Sherman was 
a bit careless with fire,' and for this reason, among 
others, he has never been a popular man in Georgia. 
For myself, however, I feel that I owe General 
Sherman a debt of gratitude. He produced condi- 
tions and an environment which made it necessary 
for the individual to develop every resource and 
every power with which nature had endowed him 
in order to exist. I believe that character is formed 
and developed in the highest degree by hardships, 
suffering and poverty. I never doubted that what- 



SOCIALISM -197 

ever of character and capacity I have developed has 
been, in a large measure, due to the surroundings 
and conditions which General Sherman forced upon 
the people of my section during the war." 

This extract is from an article on Secretary 
McAdoo in Current Opinion of April, 1913. A 
little further along it says : "The man that first dis- 
covered fire brought even the anger of the gods 
down upon him. The man that discovered that the 
world was really round was thrown into prison, and 
the man that discovered that the earth revolved 
around the sun had to recant or be excommuni- 
cated." 

The declarations of Mr. McAdoo are refreshing, 
coming at a time when the world is areek with 
namby-pamby doctrines, socialistic, semi-socialistic 
and anarchistic, all of which are advocated by those 
who would make life easy for the average man. 

Socialism and socialists are like the Irishman's 
flea — when you corner them at one point, they 
appear suddenly at another and most unexpected 
place. John Spargo's last book, "The Substance of 
Socialism," might be termed the "Last Stand of 
Socialism," were it not that he still clings tenaciously 
to the wornout doctrines of "surplus value" and 
"exploitation of labor." When socialists defend 
themselves behind the bulwark of individualism, as 
he does in the treatise named, the fabric of their 
hoary tenets is becoming, in truth, rent and torn. 
He says (p. 82) : 

"Collective ownership is not the ultimate, funda- 
mental condition of socialism. It is proposed only 
as a means to an end, not as an end itself. The 



198 THE CREATION OF WEALTH 

central idea of socialism, its spirit, is the doctrine 
of the division of society into antagonistic classes. 
The producers of wealth are exploited by a class of 
capitalists draining from them the 'surplus value,' 
and instinctively they struggle against the exploita- 
tion, to reduce the amount of the surplus value taken 
by capitalists to a minimum — ultimately to zero. To 
do away with exploitation, to destroy the power of 
one class to live upon the labors of another class, 
is the socialist aim. Social ownership and control 
are only proposed as a means to the attainment of 
that end. If other means toward that end — quicker, 
more efficient or more certain means — can be founds 
there is nothing in socialism to prevent their adop- 
tion. 

"It follows, therefore, that to make collective 
property of things not used to exploit labor does 
not, necessarily, form part of the socialist program. 
It is easy to see that, according to this principle of 
differentiation, it would be necessary to socialize the 
railroads, but not at all necessary to socialize the 
wheelbarrow." Neither would the small farmer be 
disturbed by him. 

It will be seen that this "last stand" is no stand 
at all, for the "surplus value" alleged to be derived 
from labor has been shown to be "brain value," and 
"exploitation" is, in the sense of the author of the 
book under review, a mental chimera. 

Again, Spargo says that "equality of opportu- 
nity" is the demand of the socialist. Just what he 
means by equality of opportunity would be hard to 
explain, but if opportunity to labor, to earn an 
honest living, is the desideratum, then, as we have 



SOCIALISM 199 

shown in this work, individualism, with certain 
amendations, is the answer. 

If sociaHsts, who may have discarded the Marx- 
ian theory of wealth, still believe that wealth pro- 
duced by certain kinds of brain workers should be 
appropriated by the state, the question may be asked. 
If one kind, why not all kinds of ideaistic wealth ? If 
there is to be a division into groups of the various 
kinds of mental workers, with the entrepreneurs and 
other "black sheep" on the one side, and the white 
sheep on the other, what shall be the basis of this 
division? Shall the author, inventor, actor and artist 
be placed in the latter class, or shall the inventor be 
included in the group of wealth producers who shall 
be compelled to divide their earnings? Is not one 
man's mind as much his own as another's? 

What would the hierarchy of socialism say to 
the man who claimed he could send messages with- 
out wires thousands of miles, or could transmit 
messages, written or vocal, across a continent? Or 
what kind of a term or epithet would have been 
applied to Campbell when he announced the possi- 
bility of inventing a machine to pick cotton? 

Campbell's story of his trials and disappoint- 
ments and final success, after twenty years of exper- 
imentation, to perfect the machine, reads like a 
romance. It was necessary to adjust the parts in 
such a manner that the fingers of the machine 
would collect the ripe cotton without injuring the 
bolls. This was accomplished by means of compli- 
cated machinery, by which the peculiarly jointed 
fingers would, in their delicate adjustment of stroke 
and movement, perform the work. 



200 THE CREATION OF WEALTH 

Almost simultaneously with the announcement 
of this remarkable invention came the news from 
the South that an owner of a cotton plantation, by 
means of intensive farming, had quadrupled the 
average yield per acre. Who can calculate the ben- 
efits derivable from these two discoveries when put 
into general use ? One result will be the cheapening 
of the cost of one of the most universally used of 
farm products. 

Recognizing the truth of the adage that a penny, 
or a million, saved is equal to a like amount earned, 
will the Marxite or old-school economist say which 
of the trilogy of land, labor and capital saves or 
earns all of these millions in cotton? 

Now, under the socialistic or paternal form of 
government, what would have happened? Would 
Campbell have been permitted to work twenty years 
on the cotton-picking invention? Out of the many 
millions, would he have been the one selected for 
this purpose, even if, under the guidance of those 
in power, such an invention would have been 
deemed feasible? What a fine method this would 
afford to dodge work! 

When the true laws of political economy are 
discovered, so great a thinker as G. Bernard Shaw 
will not fall into the bald error of saying: "Social 
democracy would not be long saddled with the rents 
of ability which have, during the past century, made 
our born captains of industry our masters and 
tyrants, instead of our servants and leaders. It is 
conceivable that rent of managerial ability might 
in course of time become negative, astonishing as 
that may seem to many persons who are by this 



SOCIALISM 201 

time so hopelessly confused amid existing anoma- 
lies that the proposition that 'whosoever of you will 
be the chiefest shall be the servant of all,' strikes 
them as rather an Utopian paradox than as the 
most obvious and inevitable of social arrangements." 
— "Fabian Essays in Socialism," p. 198. 

Surely, the idea of creative wealth is either abso- 
lutely unconceived or "hopelessly confused amid 
existing anomalies." Think of it! The captains of 
industry, who create opportunities to labor for mil- 
lions, who lessen the cost of living and transform 
the world into a wonderland, are accused of having 
their ability so to do "saddled" upon the people. 
Shaw should take another shy at the Shylocks and 
try to get the horse in correct juxtaposition with 
the proverbial cart. 

To negative the ability of the captains of indus- 
try would mean the destruction of initiative, the 
root of all progress. Again, to negative the ability 
of these captains would not be desirable, even if it 
were feasible. Nobody knows it all, and there is 
none so wise that some one else may not become 
wiser. Managerial ability and other forces of idea- 
istic wealth must always be in demand, not only 
that the resources of a country may be fully devel- 
oped and the highest economic returns be obtained, 
but — and this is more important — that a successful 
competition with other nations may obtain. 

It would not be desirable to curb or "negative" 
the ability of the entrepreneur or creative man for 
another reason. It is due to every man that he be 
permitted to develop his talent to the highest. It 
matters Httle what the economic effect may be; it 



202 THE CREATION OF WEALTH 

matters much whether he be allowed to develop his 
powers in order to become a full-grown man. 

But there are ways in Vv^hich a government can 
aid the people in their economic struggles, even 
though governmental control is not expedient. 
Many advocate the municipal, state or national own- 
ership of public utilities, but, in addition to the 
objectionable features cited above, there are other 
reasons why this doctrine should not prevail. First, 
there is the delay on agreeing on the proper thing 
to do, and, second, there is the temptation to select 
employees by political preferment or personal 
friendliness rather than on strict merit. 

Economic progress would be hampered at every 
turn. Where there is so much to be done, and in 
view of the fact that so much of what is accom- 
plished under individualism seems impracticable at 
first blush, it is evident that if things were left to 
a vote of a bureau, committee or other central 
authority, much that should have been done would 
be left undone. 

An excellent example of this may be readily 
recalled; namely, the delay of years in the develop- 
ment of coal and other mineral and agricultural 
lands in Alaska. There has been such a divergency 
of views as to the best methods of development 
between those in high and low authority, between 
the mass of people and the newspapers, that the coal 
has been left in the ground, while the industries of 
the Pacific Coast languished, and were forced to 
pay an exorbitant price for the fundamental base 
of all progress — ^the black diamond. 

What are some of the legitimate ways in which 



SOCIALISM 203 

a government can aid its clients, alias the people? 
It may be truthfully remarked that the various state 
and local governments builded better than they 
knew when they laid the foundations for economic 
development in establishing public schools. When 
the public school systems were first established, it 
was with the object of safeguarding and preserving 
the republic, without special reference to individual 
benefits or general industrial enhancement. It was 
purposed to educate the children in the first prin- 
ciples in order that they might, upon the attainment 
of their majority, exercise the electoral franchise 
more intelligently. Since that time there has been 
an undeviating trend toward the enlargement of the 
curriculum, until, in late years, industrial and voca- 
tional training has been introduced, and each suc- 
ceeding year has seen the expansion to more indi- 
vidualistic courses of study. 

Likewise, the National Government, through its 
various departments, is gradually adopting a more 
fraternal system of administration in educative mat- 
ters. The Department of Agriculture, as an illus- 
tration, is, in a thousand ways, teaching farmers 
how to till the soil and rear stock in a more efficient 
and productive manner. 

The National Congress and various State legis- 
latures have also placed many laws on the statute- 
books looking to the melioration of the condition 
of the working classes, but the highest good from 
this source can not be expected until a correct eco- 
nomic basis has been adopted. 

There is a limit, however, to this governmental 
supervision, and it is far from socialism. The func- 



204 THE CREATION OF WEALTH 

tion of the Government is not to direct citizens in 
their economic struggles; neither is it safe nor sane 
to guarantee a liveHhood to all, regardless of cir- 
cumstances and conditions. Anything which weak- 
ens the initiative, destroys the will or personality, 
undermines the character of an individual, or makes 
him less a man, is baneful and pernicious. 

The socialists and other agitators who claim 
opportunities for labor are becoming less with the 
advancing years do not seem to realize that oppor- 
tunities expand in proportion to the increase in 
population and the general educational and eco- 
nomic progress. What a farce to cry, "The door of 
opportunity is closed!" when heaven and earth 
stand ready to shower riches, material and imma- 
terial, upon those who qualify themselves to receive. 
Did any of the great men and women sit down and 
bewail the lack of opportunity? Did Franklin, or 
Washington, or Lincoln, or Watts, or Florence 
Nightingale, or Jenny Lind, or Jane Addams, or 
any of the captains of industry, or the inventors, or 
the professional men, who, through self-control and 
self-culture, raised himself above his fellow-man? 

Did Helen Keller bemoan the lack of opportunity 
when she found herself in a world of darkness and 
silence? The answer is the world of light, of 
beauty, of speech and song which she created, which 
she has called to her side from the invisible uni- 
verse of unexplored wealth. 

Now, all together! Do you not hear the anvil 
chorus? "But Helen Keller is a socialist — ^what 
have you got to say to that?" 

Well, if you had started with the handicaps of 



SOCIALISM 205 

Miss Keller, you would be entitled to be a socialist 
or anything else consistent with high purpose and 
endeavor. We ought to recognize the fact that 
there are two aspects of socialism — one emanating 
from the heart, and the other from the head. It is 
to be hoped that we are all "heart" socialists, that 
we possess the elements of pity and have a burning 
desire to help others in all ways compatible with 
experience and reason. But we may honestly differ 
as to methods. Some of us believe that the strong- 
est characters are formed in a struggle against the 
tide, while others would lend a helping hand under 
all circumstances. 

Coddle the cuddling child, but there comes a 
time when the crooning cradle-song must give way 
to the martial Marsellaise. The story of Helen 
Keller's achievement of the impossible should 
restore in our hearts the renascent twins of infinite 
hope and infinite courage. 

The arguments against socialism apply equally as 
strong against the doctrinal blights of syndicalism 
and the Industrial Workers of the World. If land, 
labor and capital are not the only productive forces, 
the fangs of their sinuous and insidious shibboleth 
are removed. These scourges of progress blatantly 
announce that labor, as far as the human element 
is concerned, produces all wealth and is, therefore, 
entitled to all profits. The text-books on economics, 
with John Stuart Mill as their god and guide, have 
no adequate answer to this cry, which is the basis 
of all socialistic creeds and screeds. 



XIII. 

Single Tax. 

Among the numerous "isms" which are coming 
to the surface with renewed hfe in the general swirl 
and ebullition of economic agitation is that of Sin- 
gle Tax. . The doctrine of the single tax was first 
promulgated by the Physiocrats and later rejuve- 
nated by Henry George in "Progress and Poverty." 
The latter advocated the abolition of all taxes upon 
industry -and products of industry and the taking 
by taxation upon land values of the annual rental 
value which is now rendered to private ownership. 

Mr. George advanced a number of arguments in 
favor of his theory, but the single-taxers of the 
present day confine themselves principally to the 
proposition that economic rent is created by the 
community, and that it can not, therefore, be appro- 
priated by the owner. This is the doctrine of the 
"unearned increment," and recent agitation has 
urged the gradual appropriation by the state, either 
of all the future unearned increment of land, or of 
a larger share of this future unearned increment 
than is taken at the present time in taxes. It is 
also contended that the placing on land of all the 
tax will force the development of vacant and unused 
property. 

What is the "unearned increment," so-called? 
How is it created? As a general proposition it may 

206 



SINGLE TAX 207 

be said that it has its origin in the same manner as 
all dynamic wealth — it is created by men of enter- 
prise. The fact is that the unearned increment must 
be considered as the product of economic forces, 
the greatest of which is intellect, just as the mate- 
rial progress of the world is the product of such 
forces. If we are to appropriate the rental on land 
thus increased in value, why not appropriate all of 
the industrial opportunities created by ideaistic and 
dynamic wealth-producing forces? For example, 
the industrial life of to-day creates positions for all 
sorts of experts and brain- workers. It would be 
just as reasonable to require these experts and men- 
tal workers who are thus benefited by economic 
environments to divide their salaries with the public 
as it is to ask the beneficiaries of the unearned 
increment to divide with the improvident. 

Man — ^be he beggar, proletariat, aristocrat, pluto- 
crat, or what not — is a debtor to society in num- 
berless ways and is the beneficiary of all the creative 
and dynamic wealth which has transformed the 
world into the marvelous state of advancement of 
to-day. These benefits are showered upon him 
from the time of his birth until that solemn day in 
which he closes his eyes on all earthly things. The 
sciences of chemistry, medicine, bacteriology and the 
philanthropies have taught the mother how to ward 
off many of the most destructive of infantile ills, 
and it is not altogether improbable that the reader 
owes his life to one or more of these discoveries, 
which have also saved the lives and meliorated the 
condition of numberless adults. 

Society then takes the child and teaches it the 

14 



208 THE CREATION OF WEALTH 

elements of useful knowledge by means of kinder- 
gartens and public schools, and the education thus 
acquired not only enables the child to better fight 
life's battles, but also to absorb a completer and 
fuller enjoyment of the world's good. The schools 
are supplemented by the public libraries and other 
educative forces, and after the child has reached 
maturity his life is made smoother and pleasanter 
by the presence of numerous applied arts and sci- 
ences. He can travel from place to place by water, 
rail or airship — to be strictly up to date. He can 
purchase the news of the day and magazines for a 
nominal sum. The nickelodeon or moving pictures 
have supplemented the theaters, and, in most large 
cities, free concerts are held in the parks and public 
places. The introduction of the sciences and inven- 
tions in rnanufactures has cheapened products and 
brought them within the reach of all who are will- 
ing to work for them. 

"Unearned increment," indeed! Who are the 
recipients of the unbought but real wealth of the 
world? To name them is to name all who live in 
this marvelous twentieth century. The passenger 
who pays his way, and the hobo who begs or steals 
a ride on a transcontinental train, the former to 
enjoy the scenic wonders, the latter to seek employ- 
ment, are alike obtaining the benefits of the 
unearned increment. Some go to Europe and the 
lands of the East, while others have these places 
brought to them in pictorial panoramas. 

The man of millions and the man working in 
the ditch are receiving the unearned increment 
when they purchase a paper, a periodical or a book 



SINGLE TAX 209 

for a sum which hardly pays for the paper used in 
their manufacture. The wage-earner, the farmer 
and all manual laborers are enriched by and bene- 
fited by labor-saving devices, which relieve them of 
the drudgery of the hardest forms of labor, permits 
the reduction of working-hours, and, in case of the 
farmer, increases the profits of soil culture. Pro- 
fessional men and mental laborers of all kinds are 
beneficiaries of the unearned increment by the open- 
ing of new fields of labor attendant with the exer- 
cise of man's ingenuity and creativeness. 

The emancipation of woman has come through 
the marvelous inventions. The old saw, "Man 
works from sun to sun, but woman's work is never 
done," is no longer true. Household necessities are 
now purchased by the housewife at prices that 
would astonish their grandmothers. The sewing- 
machine partly emancipated their mothers, but now 
ready-made clothing can be had so reasonable that 
the sewing-machine has, in a great measure, been 
thrown into the discard. And now comes the "fire- 
less cooker," which allows the household goddess to 
prepare three meals at once. 

The rule of the unearned increment, if there be 
such, applies principally to the small property- 
holders — those who have purchased small tracts of 
land near a growing city and held it for an increase. 
The men of capital, real-estate dealers, and others 
who purchase such land in large quantities, are, as 
a rule, engaged in enterprises which form a big 
factor in the enhancement of their own as well as 
surrounding property. He holds a position analo- 
gous to that of the railroad builder and the manu- 
is 



210 THE CREATION OF WEALTH 

facturer, who, by developing new fields of labor, 
benefit the many. Then, the taxes on the land, 
advertising and other expenses incident to its 
increase by the process of the "unearned increment," 
in most cases, go a long way towards counterbal- 
ancing any gain. There is, for that reason, a big 
element of risk. 

As to the argument that the application of the 
theory of the single tax would compel owners to 
improve their property, it may be said that the oppo- 
site effect has been experienced at places where it 
has been tried, which, upon consideration, will be 
seen to be the logical result. In Vancouver, B. C, 
it has been found that the large property-owners 
and capitalists take advantage of the exemption of 
taxes on improvements, and, instead of developing 
several pieces of property, are in the habit of erect- 
ing skyscrapers on single pieces. It should be 
apparent to all that it is impossible and inexpedient 
to "force" development, for all sane and safe prog- 
ress comes by slow processes, which must take into 
account a thousand factors in economic life. 

To sum up in a sentence, the same criticism 
applies to the teachings of single taxism as to all 
other restrictive social doctrines; it tends to destroy 
the initiative and the creative force in man, and is 
therefore hurtful to all true progress. And, as 
with the other socialistic dogmas considered, it 
appears to be a deliberate attempt to appropriate 
the earnings of enterprise without assuming any of 
its risks. 



XIV. 
Conservation. 

It is not within the province of a work of this 
kind to treat exhaustively the Conservation of Nat- 
ural Resources. The proposition that such resources 
— timber and mineral lands, waters for irrigation, 
navigation and power, fish and game and great 
scenic sections — should be conserved, needs no argu- 
ment. The reclamation of waste land, whether by 
methods of irrigation, drainage or reforestration, 
or prevention of soil erosion, comprises a stupen- 
dous constructive work for the national and state 
governments. The undue waste of national wealth 
should be prevented, without question, but the con- 
structive phase of conservation has been in a hope- 
less tangle for many years. It is all right to outline 
a policy for the prevention of waste, but, keeping 
step with this movement, there should be an intelli- 
gent plan formulated by those in authority to 
encourage a rational development of resources. 

All are familiar with the bitter controversies 
that have been raging for years between conserva- 
tionists and anti-conservationists; between advocates 
of sane measures of development and those of 
another variety, and between the national and state 
partisans. The general result of all this agitation, 
as it appears to date, is nil, or practically such. It is 
our intention to point out one or two fundamental 

211 



212 THE CREATION OF WEALTH 

propositions which may help to solve these problems. 

If our contention that all industrial develop- 
ment is due to creative forces, or men of initiative 
and enterprise, it follows that the tools of industrial- 
ism should be made as accessible and free as pos- 
sible. Some of these tools are to be found in the 
natural products — coal, iron, oil, gas, and water- 
courses. Shall these fundamental implements be 
taxed, or shall they be made as free as other needful 
and invigorating forces of nature — air, sunshine and 
rain? How sordid and unimaginative is the mind 
that can not see in coal the bustling factories, the 
thriving cities, and the great arteries of commerce 
— rivers, rail and lakes — ^black with carriers ladened 
with wealth. 

Many citizens of the United States have recently 
become obsessed with an impulse to conserve all 
kinds of national resources, apparently without a 
thought of the natural consequences. They have 
advocated the public ownership or control of min- 
eral and coal lands, without regard to the lessons 
of experience, of the attendant cost of prospecting, 
mining and distributing. Coal, particularly in 
Alaska, whose benign climate eliminates all neces- 
sity for fuel, has been the subject of bitter and 
interminable war. The many who have gone mad 
on the conservation of coal, or governmental leasing 
of coal lands, do not seem to realize that this min- 
eral is the prime element entering into all manu- 
factures, arts and industrial pursuits. It is like 
telling the farmer to till the soil without tools, or 
the teacher to instruct his pupils without first 
acquiring the rudiments of knowledge. 



CONSERVATION 213 

These politicians and agitators have frantically 
declaimed against turning over coal land to the only 
class of people able to develop it, in order that the 
Government may collect a few cents royalty per ton. 
When it is considered that the consumption of a 
small quantity of coal may give employment to 
many otherwise idle persons, or that it may be the 
means of making some discovery in the sciences or 
arts which may prove of inestimable value, the 
short-sighted policy of this variety of conservation- 
ists is apparent. 

Estimating the population of the Greater United 
States at 100,000,000, and allowing the Government 
ten cents per ton royalty on coal mined on federal 
property, for every 100,000,000 tons of coal mined, 
each individual's share would be ten cents. When 
it is realized that the reduction in taxes would be 
the greatest to those who pay the largest amount 
of taxes, the savings to the average man would be 
much less than the sum named. 

Again, if a royalty is charged on Government 
coal, the lessee will simply add an equivalent amount 
to the sale price, which is tantamount to taxing 
industries. If the Government is justified in placing 
a protective tariff on goods for the benefit of labor 
and manufactures, it is more than justified in per- 
mitting the free use of coal for the same purpose. 

The American people are not logical at all times. 
They have recognized the benefits of a tariff for 
manufactured articles and a low tariff or free trade 
for raw materials, but in the case of the rawest of 
raw materials, that of coal, it is proposed to tax 
it while still in the depths of the earth. They pro- 



214 THE CREATION OF WEALTH 

pose to lease the coal lands in such small tracts as 
to prohibit their development in a satisfactory or 
economical manner. 

The same strictures apply to the never-ending, 
merry-go-round discussion over water-power grants. 
If these prime factors in economic life must be 
taxed, in the name of all that is reasonable, tax 
them at once, in order that the wheels of progress 
may again begin to move. Of course, there is only 
one thing worse than taxing the tools of industry, 
and that is the taking of them, or the keeping of 
them from the workers of the world. 

Would not a rational solution of the conserva- 
tion problem, as regards development, be for the 
Government, national or state, to employ engineers 
of wide experience and vision to make surveys of 
the natural resources and recommend such action 
as they deem wise? In other words, place the dif- 
ficult problems in the hands of experts, thus remov- 
ing them from all forms of agitation and political 
demagogism. 

There may, and no doubt will, come a time in 
the not distant future when other means and meth- 
ods will be devised for creating power. With the 
perfection of the electrical transmission of energy, 
power can be generated at central points and con- 
ducted to factories hundreds of miles away. Then, 
also, the sea and the sun will be made to give forth 
their hidden energies, and even now the story comes 
from Philadelphia of the successful invention of a 
sun motor. It is those who have no imagination, or 
faith In the genius of man, who are loudest in their 
cries for conservation of anything and everything 



CONSERVATION 215 

in heaven and earth. While the stolid conservation- 
ist is lying awake nights worrying about what the 
world will do for this and that a thousand years 
hence, a Marconi, with his head in the clouds, finds 
a way to eliminate material altogether. 

Former Secretary of the Interior Walter L. 
Fisher, in an address delivered at a meeting of the 
National Fire Protective Association in May, 1911, 
on "Fire Waste and Remedy," said, among other 
things: "The National Government is trying to 
reduce loss by requiring fireproof material in the 
construction of its buildings. Government statistics 
show that the annual fire loss is one-half the value 
of the new buildings erected each year. A tax 
amounting to $2.51 on every man, woman and child 
in the United States is being paid in the annual fire 
loss of the nation upon its buildings and their con- 
tents alone. 

"The United States Government is the owner of 
buildings costing more than $300,000,000, and is 
spending each year more than $20,000,000 in new 
buildings. It is the policy of the Government not 
to insure its buildings against loss by fire, but to 
reduce its risks by fire. It is also its policy to min- 
imize the possibility of forest fires by effective reg- 
ulations." 

Despite the incongruity existing between the first 
and second paragraphs, his remarks contain much 
food for thought. His inconsistency lies in advo- 
cating the erection of fire-proof buildings to save 
insurance, while at the same time citing the policy 
of the Government in conserving and preserving 
forests. Lumber, the most inflammable of all mate- 



216 THE CREATION OF WEALTH 

rials used in construction, is derived from these 
forests. We do not seem to realize that the age of 
wood is passing, and that the age of concrete and 
steel is fast replacing it. Fire-proof buildings are, 
as is well known, being erected by corporations and 
individuals, and, in many instances, the fire-proofing 
applies to the furniture and equipment. 

But there is conservation and conservation. The 
ideal conservationist is he who conserves the land 
and is willing to sacrifice appetites and desires to 
that end. For instance, if, instead of gratifying 
his desire for alcoholic drink or tobacco, he would 
only consume the products of the soil that are essen- 
tial to sustenance, this would constitute true con- 
servation. We complain of the "high cost of liv- 
ing," and at the same time demand that the best 
soil in the country be devoted to the raising of 
products which are a detriment, or, at least, useless 
to mankind. The true conservationist could also 
conserve the land by eating less! Reputable physi- 
cians state that the average individual eats from 
two to three times as much as is really necessary 
or is good for him. 

Economists have recently discovered that one of 
the principal causes of the high cost of living is 
the increased use of grain and corn in the manu- 
facture of liquor. It is estimated that more grain 
is used at the present time in the manufacture of 
alcoholic products than the aggregate of such prod- 
ucts twenty years ago. Does it not appear that 
something is wrong in the industrial world when 
such a state of things exists? What a travesty to 
decry the steadily advancing prices of necessities, 



CONSERVATION . 217 

beef, cereals and other agricultural products, when 
our farms are devoted to raising crops to be con- 
verted into poisons rather than food or clothing. 

In the days of the millennium man will live sim- 
ply and long. If, as the physicians claim, over one- 
half of our food could be dispensed with, it follows 
that a greater part of our time could be devoted 
to intellectual pursuits and pleasures, and in this 
way conserve our health and well-being. But it 
seems to be a perversity of human nature to want 
to conserve something hundreds of miles away, and 
which can not in any manner affect him or his mode 
of living. 



XV. 
The Industrial Magna Charta. 

Seven hundred years ago, in "Merrie England," 
there was being enacted the last of a long series of 
persecutions and tyrannies under King John which 
culminated in the signing of the Great Charter. 
This Magna Charta was prepared and submitted to 
the king by the barons, or property-holders, whose 
rights had been invaded, but by the terms of the 
document the rights of all classes were guaranteed 
and conserved. This charter was the first great 
social legislative act of the English nation and it 
constitutes the legal foundation of Anglo-Saxon lib- 
erties. 

The essential clauses of this Magna Charta are 
those which protect the personal liberty and prop- 
erty of all free men by offering security from arbi- 
trary imprisonment and arbitrary spoliation. This 
remarkable document was called forth by the tyran- 
nies and the levying of unjust tributes by an unscru- 
pulous king. Shall the tyrannies of an over- 
scrupulous or mistaken Government be the cause 
for the declaration of a new charter based upon 
fundamental property rights? 

Socialistic doctrines, insidious and destructive, 
are slowly and stealthily permeating the nations of 
the world, threatening to immerse Industrialism in 
their noxious fumes. Shall this be permitted to go 

218 



THE INDUSTRIAL MAGNA CHARTA 219 

on until all are strangled by the deadly gas, or shall 
a new charter be proclaimed, founded upon sane 
individualism? But perhaps all of this despotic and 
confiscatory propaganda is a necessary part of a 
universal scheme or plan. If King John had not 
been so tyrannical and vacillating, there would have 
been no Magna Charta. 

Believing, as we must, that IndividuaHsm sup- 
plies the magneto-spark that sets the wheels of 
Industrialism and Commercialism going, and that 
all are bound up with, and dependent upon, the 
industrial life of a nation, the new charter must 
recognize the rights of the captains of industry — 
the creative men of initiative — who lead the way to 
all true economic progress. The adoption of this 
charter will undoubtedly prove the signal for the 
introduction of a new era of prosperity, just as the 
signing of the Great Charter ushered in a century 
of marvelous architectural, educational and industrial 
development. 

Under a sound system of economics, freed from 
the shibboleths of socialistic propagandas, the entre- 
preneur or business man can serenely conduct his 
enterprises without resort to shady methods, know- 
ing that as long as he plays fair there will be no 
governmental interposition. Then, and not until 
then, economic emancipation will, in all verity, have 
come. 



XVI. 

Conclusion. 

In conclusion, summarizing the lessons of the 
preceding chapters, it may be said that anything 
which stagnates productive thought (ideaistic 
wealth), or destroys the initiative, whether by 
restrictive legislation, undue interference with indi- 
vidualism, or by agitation looking to that end, is 
destructive of true progress. Specifically, the com- 
mercial and industrial ignis fatuii include such doc- 
trines as socialism, syndicalism, government owner- 
ship, physical valuation, single tax and the 'shibbo- 
leth of human rights vs. property rights. It has 
been proven that human and property rights are 
inextricably intertwined. 

The golden — not gold — age, however, will come 
when man shall devote his time and money to the 
satisfaction of higher wants, when his physical crav- 
ings give way to mental aspirations. He who now 
desires drink will satisfy his soul with music; she 
who now spends her money in vulgar display will 
then become a patron of the arts ; the sensualist, the 
glutton and the man who schemes for money for 
money's sake, will then devote their leisure in learn- 
ing of the highest things in life, in reading the best 
in literature or enjoying the best in the arts. 

This golden age will not come next year, or next 
century; it is needful that man pass through a long 

220 



CONCLUSION 221 

aeon of evolution before this shall come to pass. In 
the meantime, it behooves all to make the best of 
things as they are — to decline to envy those who 
possess more of this world's goods, and, in striking 
the balance, to take into consideration character and 
happiness, and, above all, to realize that this age 
(and land) is the best and most prosperous in the 
history of the world. 

The ideal life consists in finding your work, 
your niche, and in adhering to the principle of giv- 
ing and taking the best. That is, to be in a posi- 
tion to deliver things of worth and to benefit others, 
and to hold yourself in readiness to receive like 
benefits. 

But what can be done to adjust the economic 
inequaUties as they exist to-day? Before answering 
the question, it can be stated that there are apparent 
inequalities in all phases of life. Men are born 
with great talent and with little talent, with broad 
characters and narrow characters, and women are 
born with beauty and loveliness and with the oppo- 
site qualities. What can be done for all these? 

But if we examine a little closer into these 
apparent disparities, many of them will dissolve into 
thin air. The great accumulations of the wealthy 
have not only been acquired under great stress, but 
by close application to business many have wrecked 
their health and dispossessed themselves of all that 
constitutes real wealth, which comes, not from with- 
out, but from within. 

On the one hand He contentment, happiness, 
faith, hope, "plain living and high thinking;" on 
the other, envy, strife and seething struggles for, 



222 THE CREATION OF WEALTH 

and perhaps at last a realization of, riches or honor 
or fame. Stated generally, man accomplishes and 
secures that which he desires and strives for. Em- 
erson's great essay on "Compensation" clearly sets 
forth the mythical nature of many of the alleged 
inequalities existing in the world. 

The answer, then, to the question of adjusting 
economic disparities, stated as a broad principle, is 
not to make all equally wealthy, but to educate the 
youth in all that makes for the best in citizenship, 
and to show him how he can use his powers to 
attain the highest and best in life. 

But, it may be asked, what has all this moral- 
izing to do with the science of Political Economy? 
The reader who asks this question has failed to 
grasp the pivotal argument or thesis of the book; 
namely, that the essence of things, and not the 
things themselves, constitutes the basis of value; 
that the essence of man is his mental and moral 
natures, and that whatever affects these strikes at 
the root of his worth socially and economically. The 
materialists, including the greater part of the social- 
ists, who would try to make over man from the out- 
side, through changes of environment and external 
remedies, are as a hound baying at the moon. 

The great lesson is that man holds his destiny 
in the hollow of his hand; that the seeds of happi- 
ness and moral and material prosperity must be 
planted in his mind, that from his personality may 
spring both power and riches to benefit and uplift 
himself and the world. 

Then, again, the captains of industry must learn 
that if the prevailing economic system is wrecked 



CONCLUSION 223 

or discarded, it will not be because the system is 
bad or intrinsically unscientific. It will be because 
of their own willful disregard of the great moral 
verities and time-honored precepts. 

But what shall be done to relieve the needy and 
the unfortunate before the economic conditions can 
be adjusted to give them employment? Shall they 
be permitted to starve? No; but many do starve 
in China and other countries where there is not 
sufficient diversification of economic pursuits. It 
may, however, be necessary to tax the more suc- 
cessful, the more energetic and enterprising, in 
order to relieve the immediate wants of the unfor- 
tunate, but in so doing no one should confound 
charity with economics. The only lasting remedy is 
to educate them, physically, mentally and morally, 
that from the inefficient shall come the efficient and 
self-reliant. Efforts should also be made to effect 
a better distribution of labor and to provide means 
for those who can and will work to remove to those 
parts of the world where their services are in 
demand. 

The pyramid of economics, as outlined in the 
preceding chapters, may be represented by two tri- 
angles as shown on the following page. 

If this pyramid is inverted, making money the 
base and all the rest the top, it is evident the struc- 
ture will fall, unless, mayhap, the thing is converted 
into a veritable spinning-top. In that event, it will 
maintain its equilibrium just so long as it continues 
to whirl. So it will be with the individual or the 
nation. If money or wealth is made the basis or 
ambition of life, that individual or nation will stand 



224 



THE CREATION OF WEALTH 



just so long as the fates and factors of econoniic 
life permit it to revolve. It may be, as more often 
is the case, that character and all the other quali- 
ties that go to make up the "man-top" are shattered 
and scattered by the centrifugal force of the mad 
economic whirl. 

In other instances the forces that set the top 
spinning do not conform to the laws of the land, 



MONEY 




MONEY 



with the result that sooner or later the top collides 
with a materialized statute and is brought to a dead 
stop. It matters not whether the "man-top" is a 
capitalist or representative of the so-called laboring 
class — the law is universal. 

The McNamara brothers set the top spinning at 
violent speed, and, in consequence, were suddenly 
brought up against the immutable law. Likewise 
might be cited numerous instances wherein the cap- 
tains of industry have, in their race for wealth, 
brought disaster upon themselves and others. 



CONCLUSION 225 

The man who cheats, the man who gambles, the 
man who adulterates, the man who misrepresents, 
the man who tries to secure something for nothing 
— in short, he who violates any of the great eco- 
nomic laws — is as the spinning inverted pyramid. 

What folly to make money the base of life ; the 
apex of the pyramid (a thing without dimensions), 
the foundation of living, risking everything — char- 
acter, happiness and all things of worth — on the 
chance of the pyramid maintaining its balance, 

THE END. 



